REG - Alpha Bank A.E. - Half-year Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 1
RNS Number : 4619IAlpha Bank A.E.30 August 2016SEMI ANNUAL FINANCIAL REPORT
for the period from 1st January to 30th June 2016
(In accordance with Law 3556/2007)Athens,
August 30, 2016
TABLE OF CONTENTS
Statement by the Members of the Board of Directors................................................... 5
Board of Directors Semi Annual Management Report................................................... 7
Independent Auditors' Report on Review of Interim Financial Information
(on Group Interim Financial Statements)................................................................................... 19Interim Consolidated Financial Statements as at 30.6.2016
(In accordance with IAS 34)Interim Consolidated Income Statement............................................................................. 21
Interim Consolidated Balance Sheet................................................................................... 22
Interim Consolidated Statement of Comprehensive Income............................................... 23
Interim Consolidated Statement of Changes in Equity........................................................ 24
Interim Consolidated Statement of Cash Flows................................................................... 26
Notes to the Interim Consolidated Financial Statements
General Information...................................................................................................... 27
Accounting Policies Applied
1.1 Basis of presentation................................................................................................... 29
1.2 Estimates, decision making criteria and significant sources of uncertainty...................... 29
Income Statement
2. Gains less losses on financial transactions................................................................. 32
3. General administrative expenses................................................................................ 33
4. Impairment losses and provisions to cover credit risk.................................................... 34
5. Income tax.............................................................................................................. 34
6. Earnings / (losses) per share..................................................................................... 37
Assets
7. Loans and advances to customers.............................................................................. 38
8. Investment and held for trading securities.................................................................... 40
9. Investment property.................................................................................................. 41
10. Property, plant and equipment.................................................................................... 42
11. Goodwill and other intangible assets........................................................................... 43
Liabilities
12. Due to Banks........................................................................................................... 44
13. Debt securities in issue and other borrowed funds......................................................... 44
14. Employee defined benefit obligations........................................................................... 46
15. Provisions................................................................................................................ 46
Equity
16. Share capital and Retained earnings............................................................................ 48
17. Hybrid securities....................................................................................................... 48
Additional Information
18. Contingent liabilities and commitments........................................................................ 49
19. Group Consolidated Companies.................................................................................. 53
20. Disclosures of Law 4261/5.5.2014............................................................................... 56
21. Operating segments.................................................................................................. 59
22. Exposure in credit risk from debt issued by the peripheral Eurozone countries................... 60
23. Disclosures relevant to the fair value of financial instruments........................................... 61
24. Capital adequacy...................................................................................................... 66
25. Related - party transactions........................................................................................ 67
26. ssets held for sale and discontinued operations........................................................... 68
27. Corporate events....................................................................................................... 72
28. Restatement of financial statements............................................................................ 73
29. Events after the balance sheet date............................................................................. 78
Independent Auditors' Report on Review of Interim Financial Information
(on Bank's Interim Financial Statements)............................................................................. 79Interim Financial Statements as at 30.6.2016
(In accordance with IAS 34)Interim Income Statement.............................................................................................. 81
Interim Balance Sheet................................................................................................... 82
Interim Statement of Comprehensive Income.................................................................. 83
Interim Statement of Changes in Equity.......................................................................... 84
Interim Statement of Cash Flows.................................................................................... 85
Notes to the Interim Financial Statements
General Information....................................................................................................... 86
Accounting Policies Applied
1.1 Basis of presentation.............................................................................................. 88
1.2 Estimates, decision making criteria and significant sources of uncertainty..................... 88
Income Statement
2. Dividend income...................................................................................................... 91
3. Gains less losses on financial transactions................................................................. 91
4. General administrative expenses............................................................................... 92
5. Impairment losses and provisions to cover credit risk.................................................... 93
6. Income tax............................................................................................................. 93
7. Earnings/(losses) per share...................................................................................... 95
Assets
8. Loans and advances to customers............................................................................ 96
9. Trading and investment securities............................................................................. 97
10. Investments in subsidiaries, associates and joint ventures............................................ 98
11. Investment property................................................................................................. 99
12. Property, plant and equipment................................................................................. 100
13. Goodwill and other intangible assets......................................................................... 101
Liabilities
14. Due to Banks........................................................................................................ 102
15. Debt securities in issue and other borrowed funds...................................................... 102
16. Employee defined benefit obligations........................................................................ 104
17. Provisions............................................................................................................. 104
Equity
18. Share capital and Retained earnings........................................................................ 105
Additional Information
19. Contingent liabilities and commitments.................................................................... 106
20. Operating segments.............................................................................................. 108
21. Exposure in credit risk from debt issued by the peripheral Eurozone countries............... 110
22. Disclosures relevant to the fair value of financial instruments....................................... 111
23. Capital adequacy.................................................................................................. 116
24. Related - party transactions................................................................................... 117
25. Assets held for sale and discontinued operations...................................................... 119
26. Merger of Company Diners Club Greece ..P.P...................................................... 121
27. Corporate events.................................................................................................. 121
28. Restatement of financial statements....................................................................... 122
29. Events after the balance sheet date........................................................................ 123
Appendix...................................................................................................................... 125
Statement by the Members of the Board of Directors
(in accordance with article 5 paragraph 2 of Law 3556/2007)
To the best of our knowledge, the interim financial statements that have been prepared in accordance with the applicable International Financial Reporting Standards, give a true view of the assets, liabilities, equity and financial performance of Alpha Bank A.E. and of the group of companies included in the consolidated financial state
ments taken as a whole, as provided in article 5 paragraphs 3-5 of Law 3556/2007, and the Board of Directors' semi-annual management report presents fairly the information required by article 5 paragraph 6 of Law 3556/2007 and the related decisions of the Hellenic Capital Market Commission.Athens, 30 August 2016
THE CHAIRMAN
OF THE BOARD OF DIRECTORSTHE MANAGING DIRECTOR
THE EXECUTIVE DIRECTOR
VASILEIOS T.RAPANOS
ID. No 666242
DEMETRIOS P.MANTZOUNIS
ID. No 166670
ARTEMIOS CH.THEODORIDIS
ID. No 281969
Board of Directors Semi Annual Management Report
GREEK ECONOMY
The adjustment programmes, implemented since 2010, managed to address the big macroeconomic and fiscal imbalances. In particular, the significant fiscal deficit has been diminished and 80% of the total fiscal consolidation effort has been accomplished. The primary fiscal surplus is targeted to 3.5% of GDP in 2018. Moreover, the deficit in the current account, the competitiveness losses in terms of unit labour cost and the rigidities in the labour market, have been coped. There was also a restructuring of production in favor of tradable goods and services.
The Greek economy has shown signs of resilience, as the negative impact of the imposition of capital controls in the summer of 2015 proved to be more moderate than initially expected. The GDP fell by only 0.3 % in 2015, while it shrunk by 0.96%, on a yearly basis, in H1 2016.
With the successful completion of the first review of the adjustment programme, economic prospects have been improved, as the creditors approved the partial disbursement of the second loan tranche according to the ESM programme, amounting to 10.3 bn. The first part of the tranche, amounting to 7.5 bn, has already been disbursed while the remaining, 2.8 bn, is expected to be released in the fall of 2016, assuming that a number of prior actions will be fullfilled.
The disbursement of the loan tranches aim to cover financing needs and allow the partial clearance of government arrears to the private sector, which, in turn, will have a positive impact on liquidity and economic activity in H2 2016. The completion of the first review has already improved business sentiment, signaled the government's determination to continue the reforms and finally contributes to the elimination of the recessionary effect and the return of the economy to a growth path.
The real GDP registered a negative rate of change by 0.9%, on a yearly basis, in the second quarter of 2016, from -1% in the first quarter, while the economy is expected to recover from the second half of the year onwards. Furthermore, from the second half of the year, a number of positive trends in economic activity are expected to be activated, based mainly on the gradual increase of investment spending, the stabilization of private consumption and the strengthening of tourism. The positive momentum is expected to continue, assuming the continuation of the reform effort, a development that will release forces towards the shift of the production model to more extravert and innovative activities.
In 2016 overall, the decline in economic activity is estimated to range between -0.4% and -0.2%. However, in 2017 it is estimated that the real GDP will grow by 2.5% (according to the Bank of Greece) with driving forces the fixed capital formation (+10.8%), goods and services exports (+3.9%) and private consumption (+1.6 %).
The key factors that are going to determine investment spending are the acceleration of privatizations, according to the Program, and the return of confidence. The latter will be strengthened by (i) the participation of Greek government bonds to the ECB's Quantitative Easing programme, (ii) the reinstatement of waiver allowing Greek banks to access ECB's normal financing lines and (iii) the agreement reached at the Eurogroup for debt relief measures in order to achieve debt sustainability in the long run. Additionally, Greece is expected to receive approximately 36 bn from the EU structural and investment funds over the programming period 2014-2020, which will be directed to the agricultural sector as well as energy, innovation, environment, maritime and fisheries.
The short-term hard data show a mixed picture:
(a) Retail trade turnover fell by 5.5% in the first five months of 2016, on a yearly basis, compared with a fall by 1.3% in the corresponding period of 2015.
(b) Exports of goods decreased significantly by 7.9% in the first half of the year, compared with a slight decrease of 4.2% in the corresponding period of 2015. However, the trade balance benefited by the fall in fuel prices and the contraction in domestic demand, for imported consumer goods.
(c) The fall in construction sector accelerated further in 2016, as building activity remains on a downward trend and financing problems have slowed down the progress of major infrastructure projects.
d) The gross value added of services sector contracted in the first quarter of 2016 (-0.8%) as trade sectors, hotels-restaurants and transport-communications fell by 2.6%, as compared to the corresponding period of 2015.
(e) In 2016, the labor market improves, albeit at slower pace than in 2015, due to positive expectations for tourism activity and the growth of flexible forms of employment. It is indicative that in the five month period of 2016 the average unemployment rate fell to 23.8%, versus 25.5% in the same period of 2015, employment increased by 2.7% and the number of unemployed decreased by 6.3%. However, high youth unemployment and long-term unemployment remain crucial issues, whose solution is linked to the continuation of structural changes.
(f) In H1 2016, the manufacturing production increased significantly by 4.3% on a yearly basis (first half 2015: +2.8%), while in June recorded an impressive increase of 8.5%.
(g) The growth rate of new passenger car registrations also increased significantly by 14.1%, on a yearly basis, in the first seven months of 2016 and by 37.1% in July.
(h) The fiscal consolidation is on track, as in 2016 is expected a primary surplus of 1.3% of GDP, against the target set for a primary surplus of 0.5% of GDP.
(i) Additionally, tourist activity increased, as foreign visitor's arrivals are expected to register a new record in 2016 for a fourth consecutive year (according to Bank of Greece).
In the current economic environment the restoration of confidence in the domestic banking system is apparent, accompanied by the improvement in the Economic Sentiment Index in July, which was affected positively by the completion of the first review and negatively by the outcome of the British referendum.
However, the improvement of the economic climate is not balanced, as it is mainly related to positive business expectations in the services sector, due to the expected good performance of tourism. On the contrary, the downward trend in consumer confidence index and the decline of retail sales in July, on an annual basis, are attributed the tax increase burden, as a result of the fiscal discipline, which in turn may lead to economic activity slowdown.
The Banking Sector
Regarding the banking sector, there is an improvement in confidence in the domestic financial system, which is the result of a number of factors such as:
The further relaxation of capital controls which may contributes to the return of deposits. Already in July 2016 there was an increase of deposits of the private sector by 1.4% on a yearly basis. Furthermore, in July 2016 the annual rate of change of credit to the business sector declined at a slower pace (July 2016: -0.4%, June 2016: -1%).
The eligibility of the Greek government bonds as collateral in the Eurosystem by reinstating the waiver that enables Greek banks to obtain low-cost financing from the ECB.
The reinstatement of the haircut level, applied to eligible collaterals, at the one prior to the abolition of the waiver, is a favorable development that affects positively the liquidity of Greek banks.
It is also mentioned that the credibility to the Greek economy is enhanced by the additional measures that have been approved by the Parliament, in combination with the contingency mechanism which will be activated in case of failure in accomplishing the targeted primary surpluses.
The above developments are important for the Greek banking sector in a period of uncertainty in the global financial markets, especially the European ones, as indicated in the plunge of the Euro Stoxx Banks price index. Despite the fact that the results of the stress tests, implemented to the European banks, were satisfying and the additional capital needs are limited to a relatively small number of banks, the global markets remain volatile due to:
a) the political uncertainty, geopolitical tensions and terrorist attacks, b) extremely low or even negative interest rates that affect negatively the profitability of the sector, c) the weak growth of the Eurozone and UK, which will hardly accelerate following the outcome of the British referendum and d) the increasing concerns about the level of non-performing loans and the general situation of the Italian financial sector.
INTERNATIONAL ECONOMY
High volatility of stock markets recorded in the first month of 2016 showed signs of stabilising in mid-February. However, the outcome of the referendum in the UK on 23 June 2016, in favour of leaving the European Union took the stock markets by surprise and significantly increased uncertainty. As a result, the sterling has depreciated, share prices have fallen, particularly the ones of European banks. Moreover, major government bond yields have declined and entered into a negative territory. According to Fitch rating agency estimates, government debt in the global markets negative yield is worth of about $11.4 trillion.
Political and economic uncertainty was reinforced by the fact that the new institutional relationship between the United Kingdom and the European Union is not yet defined and that there is no clear timetable for its establishment. This led to a downwards revision of the estimated global economy growth. According to the latest estimates by the International Monetary Fund (July 2016), world GDP will grow at 3.1% in 2016 and will accelerate to 3.4% in 2017.
The outcome of the referendum in the United Kingdom affected the projected path of oil prices, which has been adjusted downwards, around $45 and is expected to remain at this level until the first quarter of 2017. Persistence of the oil price at very low level for more than two years, has led to the prevalence of low inflationary pressures, particularly in advanced economies. Deflationary pressures are reinforced by the decline in commodity prices, and these are expected to remain at a low level for a long period.
In developed economies, low inflation allows the continuation of expansionary monetary policy in order to strengthen recovery and improves the financial conditions of the private sector which indirectly will positively affect the public sector, too. The major Central Banks aim to increase inflation close to 2%, with a combination of conventional and unconventional measures of expansionary monetary policy as very low, or even negative, official interest rates, quantitative easing (QE) and forward guidance.
International trade in goods and services is expected to record a rise in the current year by 3.1%, and further accelerate further in the next year (3.8%), according to estimates by the International Monetary Fund.
However, the global economy continues to be afflicted by geopolitical tensions and increased terrorist incidents, which may reverse the course of global economic activity.
In the US,GDP growth is expected to decelerate to 2.2% in 2016, compared with 2.4% in 2015, due to the relatively strong dollar and the decrease of private investment, particularly in the energy sector. Private consumption remained at a satisfactory level, based on the increased labour income and higher employment. However, the volatility of macroeconomic indicators in the USand the increased uncertainty in the financial markets has not yet allowed the Federal Reserve to raise interest rates after December 2015, when it seemed that a gradual rise in interest rates would follow.
In China, GDP growth rate is expected to further decelerate in 2016 to 6.5%, after having fallen to 6.9% in 2015 and 7.3% in 2014. The reason is the weakening of investments and exports, as growth is now based more on consumption and services and less on investment and industry.
In the Eurozone, GDP growth rose to 1.6% in 2015, compared with 0.9% in 2014, but is not expected to strengthen further in 2016. The recovery is based mainly on domestic demand as the European Central Bank (ECB) has adopted accommodative monetary policy since June 2014. Indicatively, the deposit rate is negative from June 2014 (-0.10%) and has been further reduced, to -0.40%, since March 2016. However, as the ECB points out, the expansionary monetary policy is imperative to be complemented by the necessary reforms in the labour and product markets in order to improve the Eurozone competitiveness and render recovery sustainable.
The fiscal policy stance in the Eurozone, has also contributed to the short-term economic recovery, as the debt of the General Government to GDP has declined due to higher primary surpluses and the growth rate being higher than the interest rate. The debt ratio of General Government to GDP has declined to 91.7% in the first quarter of 2016 from the high level of 94.4% in 2014. However, there are still considerable differences among Member States.
The economic recovery has led to job creation and, as a result, the unemployment rate is expected to fall further in 2016, to 10.5%, from 11.5% in 2015 and 11.6% in 2014.
The banking system of the Eurozone demonstrates resilience, according to the EU-wide stress test results. The stress test was carried out in July 2016, by the European Banking Authority (EBA) in cooperation with the ECB, in a sample of 51 banks, of which 37 are under ECB's supervision. The weighted average Common Equity ratio (CET1) stands higher than in 2014, both under the baseline (July 2016: 13.0%, 2014: 11.2%) and the adverse scenario (July 2016: 9.1%, 2014: 8.6%). However, Monte dei Paschi di Siena which bears a significant volume of non-performing loans was shown to have a weak financial position. This exercised pressure on the Eurozone banking sector shares. In the end, in early August the securitisation of Monte dei Paschi di Siena non-performing loans was approved and its recapitalisation is expected to take place.
Analysis of financial statements
On 30.06.2016 the total assets amounted to 67.4 billion. This amount was reduced by 1.9 billion or 2.8% compared to 31.12.2015. At the end of June 2016, the total Group loans, before impairment, amounted to 57.8 billion compared to 58.2 in 31.12.2015, showing a decrease by 0.7%. The increase of accumulated impairments by 0.3 billion during the first semester of 2016, resulted in the adjustment of loans' balance after impairment to 45.5 billion compared to 46.2 billion in 31.12.2015.
The total deposits of the Group amounted to 31.7 billion, showing an increase compared to 31.12.2015 by 0.7%, resulting to a loan deposit ratio of 143.7%. This indicator remains relatively stable compared to 31.12.2015 which amounted to 146.9%. Eurosystem funding decreased by 1.7 billion during the first semester of 2016 mainly due to the sale of EFSF bonds through the PSPP programme, the increase of deposits and the new repurchase agreements (Repos).
In Assets held for Sale and Liabilities related to Assets held for sale, have been included the figures of the companies APE Fixed Assets, APE Commercial Property AE, APE Investment Property AE and Ioniki Hotel Enterprises S.A., following the relevant decisions for the commencement of the sale procedure.
Regarding the captions of the Equity which amounted to 8.9 billion on 30.06.2016, the Common Equity Tier I amounted to 16.7%.
Analyzing the financial performance of the first semester, the net interest income amounted to 966 million and it was positively affected by the decrease of the deposits' interest rates and of bonds issued by the Group, after the liability management exercise at the end of the previous year.
Net fee and commission income amounted to 158.8 million decreasing by 1.5% compared to the first semester of 2015, which amounted to 161.2 million. This decrease is mainly attributed to the pressure on loans and mutual funds commissions, on contrast to the improvement in credit commissions after the imposition of capital controls in the summer of 2015.
Gains less losses on financial transactions recorded profits amounting to 60 million, out of which the amount of 71.9 million concerns the compensation of the Group from the acquisition of Visa Europe by Visa Inc.
Group's total income amounted to 1,213 million, increased by 2.4% compared to the first semester of 2015 which amounted to 1,185 million.
Group's total expenses, amounted to 603 million, increased by 8.7% compared to the first semester of 2015 which amounted to 555 million mainly due to the voluntary separation scheme cost of Alpha Bank Cyprus amounting to 31.5 million as well as to the proportion of the contribution to the Resolution Fund, which in the respective semester of 2015 did not exist.
The expenses to income ratio, excluding financial results and other non-recurring expenses, decreased by 0.9% compared to the first semester of 2015. (30.06.2016: 48.2%, 30.06.2015 49.1%)
The impairment losses and provisions to cover credit risk amounted to 605 million compared to 2,099 million in the first semester of 2015 which significant impairment losses were recognized, after taking into consideration the special conditions that existed and affected the estimations for the recoverability of loans of the reporting period.
Profit/(loss) after income tax from continuing operations amounted to losses of 20.6 million and the profit/(loss) after income tax from discontinued operations amounted to profits of 1.6 million, which concern the Bulgaria Branch and the subsidiary Alpha Bank AD Skopje.
Participation in the program for the enhancement of liquidity for the Greek economy
In the context of the program for the enhancement of the Greek economy's liquidity, according to Law 3723/2008, the Bank proceeded with:
The issuance of senior debt securities guaranteed by the Greek State amounting to 5.15 billion.
These securities are pledged to the European Central Bank for liquidity purposes.
Other information
The Bank's Ordinary General Meeting of the Shareholders on 30.6.2016 decided the non distribution of dividend to the common shareholders.
Risk Management
Alpha Bank Group has established a framework of thorough and discreet management of all kinds of risks facing on the best supervisory practices and which is based on the common European legislation and the current system of common banking rules, principles and standards is improving continuously over the time in order to be applied in a coherent and effective way in a daily conduct of the Bank's activities within and across the borders making effective the corporate governance of the Bank.
The main objective of the Group during and the first half of 2016 was to maintain the high quality internal corporate governance and compliance within the regulatory and supervisory provisions risk management in order to ensure the confidence in the conduct of its business activities through sound provision of suitable financial services.
Since November 2014, the Group falls within the Single Supervisory Mechanism (SSM) - the new financial supervision system which involves the European Central Bank (ECB) and the Bank of Greece - and as a major banking institution is directly supervised by the European Central Bank (ECB).
The Single Supervisory Mechanism is working with the European Banking Authority (EBA), the European Parliament, the Eurogroup, the European Commission and the European Systemic Risk Board (ESRB) within their respective competences.
Moreover, since January 1st, 2014, EU Directive 2013/36/EU of the European Parliament and of the Council dated June 26, 2013 along with the EU Regulation 575/2013/EU dated June 26, 2013 ("CRD IV") are effective. The Directive and the Regulation gradually introduce the new capital adequacy framework (Basel III) of credit institutions.
Within this regulatory and supervisory risk management framework, Alpha Bank Group continues to strengthen its internal governance and its risk management strategy and redefining its business model in order to achieve full compliance within the increased regulatory requirements and the extensive guidelines. The latest ones are related to the governance of data risks, the collection of such data and their integration in the required reports of the management and supervisory authorities.
The Group's new approach constitutes of a solid foundation for the continuous redefinition of Risk Management strategy through (a) the determination of the extent to which the Bank is willing to undertake risks (risk appetite), (b) the assessment of potential impacts of activities in the development strategy by defining the risk management limits, so that the relevant decisions to combine the anticipated profitability with the potential losses and (c) the development of appropriate monitoring procedures for the implementation of this strategy through a mechanism which allocates the risk management responsibilities between the Bank units.
More specifically, the Group taking into account the nature, the scale and the complexity of its activities and risk profile, develops a risk management strategy based on the following three lines of defense, which are the key factors for its efficient operation:
Development Units of banking and trading arrangements {host functions and handling customer requests, promotion and marketing of banking products to the public (credits, deposit products and investment facilities), and generally conduct transactions (front line)}, which are functionally separated from the requests approval units, confirmation, accounting and settlement.
They constitute the first line of defense and 'ownership' of risk, which recognizes and manages risks that will arise in the course of banking business.
Management and control risk and regulatory compliance Units, which are separated between themselves and also from the first line of defense.
They constitute the second line of defense and their function is complementary in conducting banking business of the first line of defense in order to ensure the objectivity in decision-making process, to measure the effectiveness of these decisions in terms of risk conditions and to comply with the existing legislative and institutional framework, by involving the internal regulations and ethical standards as well as the total view and evaluation of the total exposure of the Bank and the Group to risk.
Internal audit Units, which are separated from the first and second line of defense.
They constitute the third line of defense, which through the audit mechanisms and procedures cover an ongoing basis of all operation of the Bank and the Group. They ensure the consistent implementation of the business strategy, by involving the risk management strategy through the true and fair implementation of the internal policies and procedures and they contribute to the efficient and secure operation.
Credit Risk
Credit risk arises from the potential weakness of borrowers' or counterparties' to repay their debts as they arise from their loan obligations to the Group.
The primary objective of the Group's strategy for the credit risk management is to achieve the maximization of the adjusted relative to the performance risk, by ensuring at the same time the conduct of daily business within a clearly defined framework of granting credit. This framework has been supported by strict credit criteria and it is the continuous, timely and systematic monitoring of the loan portfolio and the maintenance of the credit risks within the framework of acceptable overall risk limits.
The framework of the Group's credit risk management is developed based on a series of credit policy procedures, systems and measurement models by monitoring and auditing models of credit risk which are subject to an ongoing review process. This happens in order to ensure full compliance with the new institutional and regulatory framework as well as the international best practices and their adaptation to the requirements of respective economic conditions and to the nature and extent of the Group's business.
The indicative actions below represent the development and improvement that occurred with respect to the aforementioned framework:
Ongoing upgrade of Wholesale and Retail Banking Credit Policies in Greece and on abroad in order to be adapted in the given macroeconomic and financial conditions of the Group's risk profile as well as in the acceptable maximum risk appetite limits totally for each kind of risk.
Ongoing update of the credit rating models for corporate and retail banking in Greece and on abroad in order to ensure their proper and effective operation.
Update of the impairment policy for Wholesale and Retail Banking.
Centralized and automated approval process for retail banking applications in Greece and abroad.
Determining a specific framework for the management of overdue and non-performing loans, in addition to the existing obligations, which arise from the Executive Committee Act 2015/227 of January 9, 2015 of the European Committee for amending Executive Committee Act (EU) No. 680/2014 of the Committee for establishing executive technical standards regarding the submission of supervisory reports by institutions in accordance with the regulation (EU) No. 575/2013 of the European Parliament and the Council and Executive Committee Act of Bank of Greece, P.E.E. 42/30.5.2014 and the amendment of this with the Executive Committee Act of Bank of Greece, P.E.E. 47/9.2.2015, which define the framework of supervisory commitments for the management of overdue and non-performing loans from credit institutions.
This framework develops based on the following pillars:
1. The establishment of an independent operation management for the "Troubled assets" (Troubled Asset Committee). This is achieved by the representation of the Administrative Bodies in the Evaluation and Monitoring of Denounced Customers Committee as well as in the Arrears Councils,
2. The establishment of a separate management strategy for these loans, and
3. The improvement of IT systems and processes in order to comply with the required periodic reporting to management and supervisory mechanisms.
Systematic and periodic credit control of Wholesale and Retail Banking credit facilities.
Systematic estimation and assessment of credit risk per counterparty and per sector of economic activity.
Periodic stress tests as a tool of assessment of consequences of various macroeconomic scenarios to establish the business strategy, the business decisions and the capital position of the Group. The stress tests are performed according to the requirements of the regulatory framework and they are fundamental parameters of the Group's credit risk management Policy.
Additionally, the following actions are in progress in order to enhance and develop the internal system of credit risk management:
Continuation of the preparation for the transition process for the Bank and the Group companies to the Advanced Method for the Calculation of Capital Requirements against Credit Risk. For the purpose of this transition, the Advanced Internal Ratings-Based Approach method will be used with regards to the corporate loan portfolios, retail banking, leasing and factoring.
Development of the necessary processes and models for the implementation of IFRS 9 Financial instruments, which will be applied on January 1st, 2018.
Establishment of Environmental and social Risk Management Policy in the legal entities credit universe procedures, which is an integral part of the overall risk management framework, fully aligned with the current regulatory framework, the European legislation and the international best practices.
Expansion of systematic and periodic credit control of Wholesale and Retail Banking credit facilities including the non-performing sector.
Reinforcing the completeness and quality control mechanism of crucial fields of Wholesale and Retail Credit for monitoring, measuring and controlling of the credit risk.
Liquidity and interest rate risk of banking portfolio
In the first semester of 2016 the imposition of the capital controls in banking system, which were imposed for the first time in June 29th, 2015, remains (even though slightly relaxed) resulting to the reduction of capital sources from the banking system. In the first half of 2016, Bank's deposits dropped slightly (0.16%), while the Group's deposits showed a trend for increase by 0.74% with most important participation that of our subsidiary in Romania. As a result from these developments on 30.6.2016 Bank's financing from the Eurosystem raised to 22.7 billion, showing a decrease by 1.8 billion compared to 31.12.2015. Correspondingly, the contribution of emergency funding mechanism by Bank of Greece (ELA) to the total Eurosystem funding reached the level of 16.9 billion. On June 29, 2016 the ECB re-issued a waiver for Greek Government Debt to be used as collateral for ECB funding. As a result, Alpha Bank pledged 2.4 billion face value of Greek Government Bonds and 1,1 billion of Greek Government T-bills to the ECB, with a subsequent reduction of the ELA collateral. The cash value of the collaterals was 1.8 billion and it was used to repay ELA funding. Access to cheaper ECB funding will have a positive effect on Net Interest Income.
Under the new requirements of the liquidity Regulatory Environment (Basel III) the liquidity sources are systematically monitored. During 2016 and on a monthly basis the Bank submits the Liquidity Coverage Ratio and performed the Net Stable Funding Ratio. On quarterly basis, Bank provides information to Single Supervisory Mechanism (SSM) related with the funding sources along with the impact on Groups profitability due to interest rate crisis scenarios. Furthermore, starting in April 2016 the Bank submits to the Single Supervisory Mechanism (SSM) monthly reports for the additional liquidity monitoring metrics.
During the first half of 2016, Bank has updated the policies and procedures of the Recovery Plan along with the scenarios for the stress tests. Given the compromised situation of the Greek economy, the Bank's subsidiaries have been asked by their local supervisors, to renew and update, apart from the Contingency Funding Plans, the Recovery Plans as well.
The continuous update of the ALM system, in which all Bank's reports are based, is essential for the evolution and the development of the product mix of the Bank, by taking into account the current structure of competition and the economic conditions. In particular, the audit and the finalization of the conventions of repricing and of movement of non-maturing assets-liabilities are parts of the efficient and the effective management of asset liability risk. In cooperation with the IT Department is about to start a project in order to implement the Back testing for the ALM conventions for maturity and reprising of the accounts without contractual maturity date. The Bank has updated the ALM balance sheet in order to follow up in a more effective way the gap and the basis risk.
The interbank financing (short, medium to long-term) and the Early Warning Indicators of the Bank and of Group's subsidiaries and foreign branches are monitored on a daily basis with reports and checks in order to capture daily variations.
Due to the criticality of the Greek economy, stress tests are incurred frequently for liquidity purposes in order to assess potential outflows (contractual or contingent). The purpose of this process is to determine the level of the immediate liquidity which is available in order to cover Bank's needs.
Over and above, during the first half of 2016, the extreme scenarios for the interest rate risk were enhanced according to the new supervisory framework for interest rate risk monitoring for Bank's portfolio "Interest Rate Risk in the Banking Book" (BIS, April 2016).
Moreover, the levels of the Risk Appetite & Risk Tolerance related to interest rate risk of the banking book were readjusted.
Market, Counterparty and Currency Risk
The Group has developed a strong set of control policies and procedures in accordance with the regulatory framework and international best practices to meet business needs that involve market and counterparty risk limiting adverse impact on results and equity. The framework of methodologies and systems for the effective management of these risks is evolving on a continuous basis in accordance with the changing circumstances in the markets and in order to meet customer requirements.
The valuation of bonds and derivative positions are monitored on an ongoing basis. The terms are examined for each new position and an appropriate valuation methodology is developed, in case it is required. On a regular basis stress tests are conducted in order to assess the impact on results and equity of various scenarios in the market conditions where the Group operates.
A detailed structure for trading and investment position limits and counterparty limits have been adopted and implemented, that involve regular monitoring of trigger events in order to perform extra limit reviews. The limit usage is monitored on an ongoing basis and any limit breaches identified are reported officially.
For the mitigation of the market risk of the banking portfolio, hedging relationships using derivatives are applied and hedge effectiveness is tested on a regular basis.
In 2015, there were problems in conducting operations in foreign currency financing due to the restrictions on capital movements and the reduction or withdrawal of interbank credit lines, resulting in an increase in the Group open currency position. As market conditions improve during 2016, the Group gradually reduces these positions. During the first semester 2016 the counterparty credit and country risk manual was reviewed and it is gradually applied by the Group companies. The Group participates in the Targeted Review of Internal Models conducted by the European Central Bank due to the application of an internal model for the market risk capital requirement calculation and submitted the required questionnaire during the first semester 2016. Furthermore, the Group participated in the benchmarking of internal approaches regarding market risk, that was conducted by the European Banking Authority in cooperation with the European Central Bank, as well as the ad-hoc Quantitative Impact Study for Basel III monitoring regarding the application of the Fundamental Review of the Trading Book for market risk capital requirement calculation, that was conducted by the European Central Bank.
Operational Risk
In the context of the continuous improvement in the implementation of the operational risk management framework, the Bank proceeded rigorously to the expansion of preventive measures in order to identify and evaluate risk as well as, the enhancement of the process of collecting and analyzing operational risk events.
Specifically, the RCSA method of operational risk self-assessment has been implemented during the year in accordance with the general plan for the Bank and Group Companies. It is noted that this method provides the recognition and assessment of potential operational risks through the implementation of audits (residual risks). Further to the above the respective divisions proceed with the appropriate actions in order to mitigate the potential negative impacts.
Moreover, a project for the improvement of the Operational Risk Management Framework and the implementation of Advanced Techniques in Operational Risk Measurement is in progress.
The operational risk events, the risk and control self-assessment results as well as, other operational risk issues are systematically monitored by the Bank and the Group Companies by the competent Operational Risk Management Committees which review the relevant information and ensure the implementation of Operational Risk mitigation measures.
Management Non Performing Loans (NPLs)
The quality of the Bank's loan portfolio deteriorated in the fourth quarter of 2008 till the fourth quarter of 2014 as a result of the prolonged recession of the Greek economy where GDP fell by 24.3%1. This had as a consequence an increase of the non-performing loans (NPL) in all individual portfolios. In response to these challenges, the Bank focused on three key prevention strategies of NPLs:
Focus on enhancing recovery efforts, particularly in relation to the borrowers in early deliquencies
Improvement and enhancement of tangible collaterals
Offering of forbearance products to borrowers in an effort to alleviate short-term financial difficulties. This ensures that the Bank could complete these products, if necessary, once a more stable macroeconomic environment allows for a better assessment of the financial capacity for the borrowers.
However, in a very challenging economic environment, the Bank constantly reviews and adjusts its strategy for the management of NPLs. During 2014 and 2015, the Bank has implemented a major change in the management infrastructure and its NPL strategy, using Bank of Greece recommendations for non-performing loans (Troubled Asset Review) and the Act 47 of the Executive Committee.
The development and launch of targeted long-term arrangements represents a significant shift from the past, where the focus was more on short-term arrangements. In addition, efforts for the increased collectability and improved collateral levels remain a key aspect of the Bank's strategy.
At the same time key operating indicators were adjusted and updated accordingly:
Organizational restructuring: Major re-emgineering aiming at creating and developing appropriate and independent management structures, which in tandem with improvements in the overall governance structure, provide increased control over governance as well as the implementation of evidence-based practices and policies regarding the management of past due portfolio.
1 ELSTAT http://www.statistics.gr/portal/page/portal/ESYE/PAGE-themes?p_param=A0704&r_param=SEL84&y_param=TS&mytabs=0, table 13
Segmentation and Portfolio Analysis: clearly defined and detailed strategies are in progress, including a strict and well defined segmentation framework.
Flexible and upgraded modification products and final settlement solutions (for example out of court settlements).
Focused human resources management with specialised teams and targeted training.
Significant IT investment and automated decision-making tools (for example NPV calculators)
These functional changes are related to major strategic movements, and more specifically:
Joint Venture with Aktua (which is a specialized provider of loan services, group member of Centerbridge). This joint venture, is expected to start its operations in the first quarter of 2017. This action will allow the Bank to manage more effectively the portfolio of the non-performing loans as well as the real estate which is under its ownership (REO).
Agreement with Eurobank, EBRD and KKR Credit for assigning the management of large corporate credit and equity exposures to Pillarstone, with the aim to provide operational expertise and fresh long term capital, so as to help companies stabilize, recover and grow. This innovative platform is anticipated to become operational within 2016.
Loss Budget allocation framework: the Bank, in collaboration with an international consultant, has formulated a granular loss budget allocation framework o facilitate the implementation of its strategy for the restructuring of the portfolio of non-performing loans. This framework provides for:
i. Loss allocation into sub-portfolios in order to achieve better non-performing loans management objectives.
ii. Control and monitoring of key performance indicators of the Bank's NPLs management strategy
iii. Identification of the most suitable resolution strategies per segment
Property Repossession Strategy (REO): Evaluation of the existing Property Repossession strategy in order to determine the best way to maximize their value for the Bank in the current economic environment.
Some of the above initiatives are already in place (e.g, organization, systems), while others have been already developed and implemented over the past months.
In addition, it is expected that the above initiatives will also benefit from the changes in the Greek legislative framework and the improvement in the economic climate.
More specifically:
Structural Reforms: The implementation of the planned structural reforms, as they are stated in the third loan agreement, is expected to create the necessary conditions for the banks in order to implement the best possible way for their strategy. Particularly, an expanded judicial reform, the new civil procedure code, the changes regarding the residential property either the auction suspension removal of the principal residence or the private creditors alleviation are some of them.
Improved macroeconomic environment forecast: The estimated improvement of the Greek economy, in conjunction with the eventual lifting of capital controls, is expected to improve the ability of borrowers to respect their repayment schedules. It is also expected that they will enhance the reliability of the planned business projects, by enhancing the value of the existing collaterals.
Administrative Structure Division - Arreas Management
Having realized the strategic need to focus on NPL management, the Bank has embarked on an effort to streamline the monitoring functions and the management of past due exposures. Dedicated teams have been established within the Bank to monitor the evolution of a wide range of NPL-related strategies and metrics within the Bank's pre-defined NPL Strategy.
Organisation Structure and Corporate Governance
Since 2009 discrete units for the management of Retail and Wholesale NPLs have been established and they are key pillars for the Bank. These independent Units report directly to the Bank CEO through the Directors of each division. Moreover, they are responsible for all the areas which are related to the loan management - such as monitoring the portfolio and the front line services. Through those Units, the Bank has achieved the segregation of arrears management, from the Relationship Management and the Approval Authorities, by combining automated and mass procedures for portfolio's low-risk segments and a case by case management of the portfolio's more complex and higher-risk segments.
Furthermore, the establishment of the Troubled Assets Committee (TAC) has also contributed to the strategic alignment of the Retail & Wholesale NPL strategy.
Exposure management of arrears strategy
Investing in the organizational structure of the arrears units, the Bank has developed a strategic framework for the troubled assets in line with the Act 47 / 09.02.2015 of the Executive Committee of the Bank of Greece and the banks' Code of Conduct.
The procedures are defined based on the delinquency bucket and / or whether the borrower is viable or not (Going Concern vs. Gone Concern status). In this way, further segmentation of the non-performing portfolio by using financial indicators and several models has been achieved. The policies and procedures of sophisticated control mechanisms on the front line processes, such as daily monitoring of collection companies and by strengthening the control mechanisms for collection agencies and law firms (including the frequent on-site visits) are key pillars of the management of the non-performing loans for the Bank's management.
The TAC plays a pivotal role in setting and monitoring of the overall NPL strategy
Prospects for the future
The year 2016 could be considered as the beginning of a new face that will lead the country, out of the economic crisis, to a sustainable growth. However, this requires: (a) the continuation of fiscal consolidation in order to achieve the fiscal primary surplus target of 3.5% of GDP in 2018, (b) the rapid implementation, with continuity and consistency, of reforms in the goods and services markets and in the functioning of the public sector, the utilization of public property and the acceleration of privatizations, (c) the encouragement of business investment by ensuring a stable and friendly environment to entrepreneurship.
In this context, the active management of non-performing loans in conjunction with the reduction in funding costs of the Bank and the already improved from the first semester expenses to income ratio, is expected to gradually lead the Group to profitability.
Related parties
According to the corresponding regulatory framework, this report must include the main transactions with related parties. All the transactions between related parties, of the Bank and the Group companies, are performed in the ordinary course of business, conducted according to market conditions and are authorized by corresponding management personnel. There are no other material transactions between related parties beyond those described in the following paragraph.
a. The outstanding balances of the Group transactions with key management personnel which is composed by members of the Board of Directors and the Executive Committee of the Bank, as well as their close family members and the companies relating to them, as well as the corresponding results from those transactions are as follows:
Amounts in thousants of euro
Loans and advances to customers
10,001
Due to customers
26,780
Employee defined benefit obligations
221
Letters of guarantee and approved limits
10,931
Interest and similar income
50
Fee and commission income
68
Interest expense and similar charges
31
Fees paid to key management and close family members
1,753
b. The outstanding balances and the corresponding results of the most significant transactions of the Bank with Group companies are as follows:
. subsidiaries
Amounts in thousants of euro
Name
Assets
Liabilities
Income
Expenses
Letters of guarantee and other guarantees
Banks
1. Alpha Bank London Ltd
16,405
11,377
5,262
1,560
2. Alpha Bank Cyprus Ltd
187,689
235,261
739
10
60,212
3. Emporiki Bank Cyprus Ltd
4. Alpha Bank Romania S.A.
1,283,895
160,589
870
1,597
333,859
5. Alpha Bank AD Skopje
37
6. Alpha Bank Srbija A.D.
143,398
26,758
977
96
6,083
7. Alpha Bank Albania SH.A.
15,863
20,946
205
109
Leasing companies
1. Alpha Leasing A.E.
199,449
8,898
2,468
87
2. ABC Factors A.E.
444,376
483
11,378
52,463
Investment Banking
1. Alpha Finance A.E....
140
14,555
459
276
56
2. SSIF Alpha Finance Romania S.A.
15
3. Alpha Ventures ..
35,919
3
160
4. Alpha A.E. Ventures Capital Management - S
2,081
13
8
5. Emporiki Ventures Capital Developed Markets Ltd
6. Emporiki Ventures Capital Emerging Markets Ltd
394
. subsidiaries Amounts in thousants of euro
Name
Assets
Liabilities
Income
Expenses
Letters of guarantee and other guarantees
Asset Management
1. Alpha Asset Management ..D...
11,744
41,107
13,838
160
Insurance
1. Alpha Insurance Agents ..
4,990
7,017
4,990
25
2. Alphalife A.A.E.Z.
393
593
583
990
Real estate and hotel
1. Alpha Astika Akinita .
334
58,398
500
2,750
2. Ionian Hotel Enterprises ..
67,347
5,658
861
146
3. Oceanos .....
2,749
11
4. Emporiki Development and Real EstateManagement A.E.
48,712
253
5. Alpha Real Estate Bulgaria E.O.O.D.
6. Chardash Trading E.O.O.D.
290
7. Alpha Investment Property Chalandriou ..
19,254
22,514
173
4
8. Alpha Investment Property Attikis ..
6,377
1
83
9. Alpha Investment Property Attikis II ..
612
10. Alpha Investment Property Amarousion ..
1,530
19,493
12
4
11. Alpha Investment Property Amarousion ..
478
13,173
4
2
12. Stockfort Ltd
23,369
3
215
13. AGI-RRE Zeus S.R.L.
31,649
301
14. AGI-RRE Poseidon S.R.L.
13,041
124
15. AGI-BRE Participations 1 E.O.O.D.
4,623
52
16. AGI-BRE Participations 2 E.O.O.D.
8,811
91
17. AGI-BRE Participations 2BG E.O.O.D.
2,014
28
18. AGI-BRE Participations 3 E.O.O.D.
19,736
179
19. AGI-BRE Participations 4 E.O.O.D.
20. APE Fixed Assets ..
7
21. HT-1 E.O.O.D.
317
8
22. SC Carmel Residential S.R.L.
6,759
123
23. AGI - RRE Hera S.R.L.
12,248
119
24. Alpha Investment Property Neas Kifisias ..
3,361
900
27
25. Alpha Investment Property Kallirois ..
588
988
5
26. Alpha Investment Property Leivadias ..
4,506
153
91
27. Asmita Gardens S.R.L.
28. Alpha Investment Property Kefalariou ..
20
29. Ashtrom Residents S.R.L.
9,735
30. AGI-BRE Participations 5 E.O.O.D.
31. Cubic Center Development S.A.
27,569
32. Alpha Investment Property Neas Erythreas ..
10,000
1,571
33. Anaplasis Plagaias ..
15,068
703
34. Alpha Real Estate Services S.R.L.
10
Special purpose and holding entities
1. Alpha Credit Group Plc
9,014
2. Alpha Group Jersey Ltd
21
15,273
15,542
3. Alpha Group Investments Ltd
24,921
4. Ionian Holdings ..
56,034
332,614
56,034
1,431
5. Ionian Equity Participations Ltd
775
424
6. Emporiki Group Finance Plc
1,289
7. AGI - RRE Participations 1 Ltd
1,157
8. Alpha Group Ltd
263,863
36
9. Katanalotika Plc
1,187
10. Epihiro Plc
1,253
11. Irida Plc
331,982
44,784
444
12. Pisti 2010-1 Plc
142
13. Alpha Shipping Finance Ltd
5
257,530
2,333
6,541
14. Umera Ltd
417,354
22,257
773
38
9,660
15. AGI-RRE Poseidon Ltd
38,006
317
. subsidiaries Amounts in thousants of euro
Name
Assets
Liabilities
Income
Expenses
Letters of guarantee and other guarantees
16. AGI-BRE Participations 4 Ltd
3,381
85
17. AGI-RRE Artemis Ltd
1,731
18. Zerelda Ltd
1
19. AGI-Cypre Ermis Ltd
1,750,754
44,211
14,050
315,916
20. AGI-SRE Ariadni DOO
21,697
21. AGI-CYPRE ALAMINOS LTD
8,356
3
22. AGI-CYPRE TOCHINI LTD
1,287
23. AGI-CYPRE MAZOTOS LTD
7,410
Other companies
1. Kafe Alpha A.E.
170
8
142
2. Alpha Supporting Services ..
31,196
280
3,398
3. Real Car Rental A.E.
46
4. Zerelda Ltd
1
5. Evisak ..
885
3
6. Emporiki Management ..
15
1,985
24
7
7. Alpha Bank Notification Services ..
5
382
6
150
. JOINT VENTURES
1. APE Commercial Property ..
4
13,652
1
62
2. APE Investment Property ..
149,262
6,918
2,456
24
3. Alpha ...S.
425
4. Rosequeens Properties S.R.L.
5,398
400
5. Aktua Hellas Holdings S.A.
21
C. ASSOCIATES
1. AEDEP Thessalias and Stereas Ellados
60
2. Banking Information Systems ..
288
3. Olganos ..
3,044
5
Total
5,394,764
1,815,717
122,740
18,810
795,351
c. Other related party transactions
The outstanding balances and the corresponding results are analyzed as follows:
Amounts in thousants of euro
Assets
Liabilities
Income
Expenses
Employees Supplementary Funds - P
2,345
16
Hellenic Financial Stability Fund - HFSF
5
Athens, 30 August 2016
THE CHAIRMAN
OF THE BOARD OF DIRECTORSVASILEIOS T. RAPANOS
I.D. No 666242
Interim Consolidated Financial Statements as at 30.6.2016
Interim Consolidated Income Statement
(Amounts in thousands of Euro)
From 1 January to
From 1 April to
Note
30.6.2016
30.6.2015*
30.6.2016
30.6.2015*
Interest and similar income
1,382,951
1,524,439
677,464
763,387
Interest expense and similar charges
(416,644)
(567,545)
(194,099)
(281,459)
Net interest income
966,307
956,894
483,365
481,928
Fee and commission income
182,447
194,511
94,063
96,380
Commission expense
(23,677)
(33,347)
(13,869)
(18,984)
Net fee and commission income
158,770
161,164
80,194
77,396
Dividend income
1,120
545
529
520
Gains less losses on financial transactions
2
60,038
35,962
56,999
10,005
Other income
27,275
30,576
14,921
16,979
88,433
67,083
72,449
27,504
Total income
1,213,510
1,185,141
636,008
586,828
Staff costs
(258,481)
(263,471)
(129,026)
(129,888)
Provision for voluntary separation scheme
(31,480)
(487)
General administrative expenses
3
(247,089)
(237,329)
(128,847)
(120,486)
Depreciation and amortization
(49,495)
(51,537)
(23,632)
(25,921)
Other expenses
(16,274)
(2,208)
(12,706)
(1,311)
Total expenses
(602,819)
(554,545)
(294,698)
(277,606)
Impairment losses and provisions to cover credit risk
4
(604,828)
(2,098,842)
(349,710)
(1,672,696)
Share of profit/(loss) of associates and joint ventures
(1,967)
(3,987)
(506)
(1,997)
Profit/(loss) before income tax
3,896
(1,472,233)
(8,906)
(1,365,471)
Income tax
5
(24,447)
309,358
(9,540)
318,579
Profit/(loss) after income tax from continuing operations
(20,551)
(1,162,875)
(18,446)
(1,046,892)
Profit/(Loss) after income tax from discontinued operations
26
1,607
(89,208)
1,666
(89,353)
Profit/(loss), after income tax
(18,944)
(1,252,083)
(16,780)
(1,136,245)
Profit/(loss) attributable to:
Equity owners of the Bank
- from continuing operations
(20,650)
(1,163,042)
(18,502)
(1,046,923)
- from discontinued operations
1,607
(89,208)
1,666
(89,353)
(19,043)
(1,252,250)
(16,836)
(1,136,276)
Non-controlling interests
- from continuing operations
99
167
56
31
Earnings/(losses) per share:
Basic and diluted (per share)
6
(0.01)
(4.90)
(0.01)
(4.45)
Basic and diluted from continuing operations (per share)
6
(0.01)
(4.55)
(0.01)
(4.10)
Basic and diluted from discontinued operations (per share)
6
0.00
(0.35)
0.00
(0.35)
* The figures of the Interim Consolidated Income Statement of the comparative periods have been restated due to modification of the presentation of legal expenses, the finalization of the Bulgaria Branch transfer terms and the presentation of Alpha Bank Skopje as a discontinued operation (notes 26 and 28).
Interim Consolidated Balance Sheet
(Amounts in thousands of Euro)
Note
30.6.2016
31.12.2015*
ASSETS
Cash and balances with Central Banks
1,486,533
1,730,327
Due from banks
2,121,309
1,976,273
Trading securities
8
2,590
2,779
Derivative financial assets
839,166
793,015
Loans and advances to customers
7
45,495,962
46,186,116
Investment securities
- Available for sale
8
5,644,128
5,794,484
- Held to maturity
8
44,746
79,709
- Loans and receivables
8
3,683,411
4,289,482
Investments in associates and joint ventures
10,582
45,771
Investment property
9
628,290
623,662
Property, plant and equipment
10
823,731
860,901
Goodwill and other intangible assets
11
366,224
345,151
Deferred tax assets
4,421,863
4,398,176
Other assets
1,520,955
1,508,633
67,089,490
68,634,479
Assets held for sale
26
282,429
663,063
Total Assets
67,371,919
69,297,542
LIABILITIES
Due to banks
12
23,417,669
25,115,363
Derivative financial liabilities
1,659,398
1,550,529
Due to customers (including debt securities in issue)
31,667,039
31,434,266
Debt securities in issue and other borrowed funds
13
320,444
400,729
Liabilities of current income tax and other taxes
26,437
38,192
Deferred tax liabilities
23,213
20,852
Employee defined benefit obligations
14
87,674
108,550
Other liabilities
902,905
910,623
Provisions
15
335,968
298,458
58,440,747
59,877,562
Liabilities related to assets held for sale
26
9,322
366,781
Total Liabilities
58,450,069
60,244,343
EQUITY
Equity attributable to equity owners of the Bank
Share capital
16
461,064
461,064
Share premium
10,790,870
10,790,870
Reserves
189,762
300,086
Amounts recognized directly in equity for held for sale items
(122)
8,834
Retained earnings
16
(2,558,915)
(2,546,885)
8,882,659
9,013,969
Non-controlling interests
24,059
23,998
Hybrid securities
17
15,132
15,232
Total Equity
8,921,850
9,053,199
Total Liabilities and Equity
67,371,919
69,297,542
* The figures of the Consolidated Balance Sheet of the comparative period have been restated due to the completion of the valuation of net assets of acquired subsidiary company (note 28).
Interim Consolidated Statement of Comprehensive Income
(Amounts in thousands of Euro)
Note
From 1 January to
From 1 April to
30.6.2016
30.6.2015*
30.6.2016
30.6.2015*
Profit/(loss), after income tax, recognized in the income statement
(18,944)
(1,252,083)
(16,780)
(1,136,245)
Other comprehensive income recognized directly in equity:
Amounts that may be reclassified to the income statement
Net change in available for sale securities' reserve
(20,838)
(328,119)
73,668
(127,829)
Net change in cash flow hedge reserve
(127,695)
63,745
(28,443)
153,944
Exchange differences on translating and hedging the net investment in foreign operations
(1,901)
596
1,199
(1,749)
Change in the share of other comprehensive income of associates and joint ventures
101
101
Income tax
5
38,635
62,563
(15,862)
(15,295)
Amounts that may be reclassified to the income statement from continuing operations
(111,799)
(201,114)
30,562
9,172
Amounts that may be reclassified to the income statement from discontinued operations
(40)
39
7
(10)
Amounts that may not be reclassified to the income statement
-
-
-
-
Total of other comprehensive income recognized directly in equity, after income tax
5
(111,839)
(201,075)
30,569
9,162
Total comprehensive income for the period, after income tax
(130,783)
(1,453,158)
13,789
(1,127,083)
Total comprehensive income for the period attributable to:
Equity owners of the Bank
- from continuing operations
(132,411)
(1,364,207)
12,123
(1,037,816)
- from discontinued opearations
1,567
(89,169)
1,626
(89,314)
(130,844)
(1,453,376)
13,749
(1,127,130)
Non controlling interests
-from continuing operations
61
218
40
47
* The figures of the Consolidated Statement of Comprehensive Income of the comparative period have been restated due to the finalization of the Bulgaria Branch transfer terms, the completion of the valuation of net assets of acquired subsidiary company and the presentation of Alpha Bank Skopje as a discontinued operation (notes 26 and 28).
Interim Consolidated Statement of Changes in Equity
(Amounts in thousands of Euro)
Note
Share Capital
Share
PremiumReserves
Retained earnings
Total
Non controlling interests
Hybrid securities
Total
EquityBalance 1.1.2015
3,830,718
4,858,216
105,687
(1,142,801)
7,651,820
23,266
31,464
7,706,550
Changes for the period
1.1 - 30.6.2015
Profit for the period, after income tax
(1,252,250)
(1,252,250)
167
(1,252,083)
Other comprehensive income recognized directly in equity, after income tax
(201,126)
(201,126)
51
(201,075)
Total comprehensive income for the period, after income tax
-
-
(201,126)
(1,252,250)
(1,453,376)
218
-
(1,453,158)
(Purchases), (redemptions)/sales of hybrid securities, after income tax
1,010
1,010
(1,729)
(719)
Appropriation to reserves
1,599
(1,599)
-
-
Balance 30.6.2015
3,830,718
4,858,216
(93,840)
(2,395,640)
6,199,454
23,484
29,735
6,252,673
Changes for the period
1.7 - 31.12.2015
-
Profit for the period, after income tax
(119,464)
(119,464)
93
(119,371)
Other comprehensive income recognized directly in equity, after income tax
401,839
3,045
404,884
(36)
404,848
Total comprehensive income for the period, after income tax
-
-
401,839
(116,419)
285,420
57
-
285,477
Decrease of ordinary shares nominal value
(3,754,104)
3,754,104
-
-
Share capital increase paid in cash
232,825
1,319,344
1,552,169
1,552,169
Share capital increase through capitalization of financial receivables
151,625
859,206
1,010,831
1,010,831
Share capital increase expenses, after income tax
(43,506)
(43,506)
(43,506)
Effect due to change of the income tax rate for share capital increase expenses
6,261
6,261
6,261
Purchases/sales and change of ownership interests in subsidiaries
(457)
(457)
457
-
(Purchases), (redemptions)/sales of hybrid securities, after income tax
3,797
3,797
(14,503)
(10,706)
Appropriation to reserves
921
(921)
-
-
Balance 31.12.2015
461,064
10,790,870
308,920
(2,546,885)
9,013,969
23,998
15,232
9,053,199
(Amounts in thousands of Euro)
Note
Share Capital
Share
PremiumReserves
Retained earnings
Total
Non controlling interests
Hybrid securities
Total
EquityBalance 1.1.2016
461,064
10,790,870
308,920
(2,546,885)
9,013,969
23,998
15,232
9,053,199
Changes for the period
1.1 - 30.6.2016
Profit for the period, after income tax
(19,043)
(19,043)
99
(18,944)
Other comprehensive income recognized directly in equity, after income tax
(111,801)
(111,801)
(38)
(111,839)
Total comprehensive income for the period, after income tax
-
-
(111,801)
(19,043)
(130,844)
61
-
(130,783)
Share capital increase expenses, after income tax
(689)
(689)
(689)
(Purchases)/sales and change of ownership interests in subsidiaries
(8,794)
8,794
-
-
(Purchases), (redemptions)/sales of hybrid securities, after income tax
60
60
(100)
(40)
Appropriation of reserves
1,315
(1,315)
-
-
Other
163
163
163
Balance 30.6.2016
461,064
10,790,870
189,640
(2,558,915)
8,882,659
24,059
15,132
8,921,850
* The figures of the Consolidated Statement of Changes in Equity of the comparative period have been restated due the completion of the valuation of net assets of acquired subsidiary company (note 28).
Interim Consolidated Statement of Cash Flows
(Amounts in thousands of Euro)
From 1 January to
Note
30.6.2016
30.6.2015*
Cash flows from continuing operating activities
Profit/(loss) before income tax
3,896
(1,472,233)
Adjustments for gains/(losses) before income tax for:
Depreciation/ impairment of fixed assets
9,10
27,400
29,114
Amortization of intangible assets
11
22,095
22,423
Impairment losses from loans, provisions and staff leaving indemnity
641,523
2,140,817
(Gains)/losses from investing activities
(69,292)
34,524
(Gains)/losses from financing activities
31,017
54,269
Share of (profit)/loss of associates and joint ventures
1,967
3,987
658,606
812,901
Net (increase)/decrease in assets relating to continuing operating activities:
Due from banks
(225,373)
867,113
Trading securities and derivative financial assets
(45,962)
217,710
Loans and advances to customers
298,866
(849,764)
Other assets
2,562
(90,108)
Net increase /(decrease) in liabilities relating to continuing operating activities:
Due to banks
(1,697,694)
11,092,339
Derivative financial liabilities
(18,826)
(58,901)
Due to customers
229,900
(11,632,986)
Other liabilities
18,010
(67,689)
Net cash flows from continuing operating activities before taxes
(779,911)
290,615
Income taxes and other taxes paid
(18,076)
(30,601)
Net cash flows from continuing operating activities
(797,987)
260,014
Net cash flows from discontinued operating activities
(21,270)
10,551
Cash flows from continuing investing activities
Investments in associates and joint ventures
(98)
(344)
Acquisitions during the period
9,151
Amounts received from disposal of subsidiary
15,392
Dividends received
1,120
560
Acquisitions of fixed and intangible assets
(97,824)
(42,692)
Disposals of fixed and intangible assets
44,176
6,318
Net (increase)/decrease in investement securities
663,048
(255,253)
Net cash flows from continuing investing activities
610,422
(266,868)
Net cash flows from discontinued investing activities
(24,390)
6,933
Cash flows from continuing financing activities
Receipts of debt securities in issue and other borrowed funds
577
Repayments of debt securities in issue and other borrowed funds
(82,194)
(89,451)
(Purchases)/sales of hybrid securities
(15)
(467)
Share capital increase expenses
(970)
Net cash flows from continuing financing activities
(82,602)
(89,918)
Effect of exchange rate differences on cash and cash equivalents
(24,489)
1,843
Net increase/(decrease) in cash flows from continuing activities
(294,656)
(94,929)
Net increase/(decrease) in cash flows from discontinued activities
(45,660)
17,484
Cash and cash equivalents at the beginning of the period
1,328,133
1,194,244
Cash and cash equivalents at the end of the period
987,817
1,116,799
* The figures of the Interim Consolidated Statement of Cash Flows of the comparative period has been restated due to the finalization of the Bulgaria Branch transfer terms and the presentation of Alpha Bank Skopje as a discontinued operation (notes 26 and 28).
Notes to the Interim Consolidated 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, insurance services, real estate management, hotel services.
The parent company of the Group is Alpha Bank A.E. which operates under the brand name Alpha Bank. The Bank's resistered 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 30.6.2016 consists of:
CHAIRMAN (Non Executive Member)
Vasileios T.Rapanos
VICE CHAIRMAN (Non Executive Independent Member)
Pavlos A.Apostolides **/****
EXECUTIVE MEMBERS
MANAGING DIRECTOR
Demetrios P.Mantzounis
EXECUTIVE DIRECTORS AND GENERAL MANAGERS
Spyros N.Filaretos (COO)
Artemios Ch.Theodoridis
George C.Aronis
NON-EXECUTIVE MEMBERS
Efthimios O.Vidalis
Ioanna E.Papadopoulou ****
NON-EXECUTIVE INDEPENDENT MEMBERS
Evangelos J.Kaloussis */***
Ioannis K.Lyras */**
Ibrahim S.Dabdoub **
Shahzad A.Shahbaz ***/****
Jan 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
George P.Triantafyllides
At its meeting held on 28.7.2016, the Board of Directors of Alpha Bank elected Mr. Richard R. Gildea as Member of the Board of Directors of the Bank, for the remainder of its tenure, in replacement of Mrs Ioanna E.Papadopoulou 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 has appointed for the fiscal year 2016 KPMG Certified Auditors A.E. as Certified auditors of the Bank, by the following:
a. Principal Auditors: Nikolaos E.Vouniseas
John A.Achilas
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, the Stoxx Europe 600 and FTSE Med 100.
Apart from the Greek listing, the shares of the Bank are listed in the London Stock Exchange in the form of international certificates (GDRs) and they are traded over the counter in New York (ADRs).
Total common shares in issue as at 30 June 2016 were 1,536,881,200.
In Athens Stock Exchange are traded 1,367,706,054 common shares of the Bank, while the Hellenic Financial Stability Fund ("HFSF") possesses the remaining 169,175,146 common, registered, voting, paperless shares or percentage equal to 11.01% on the total of common 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 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 first semester of 2016, the average daily volume per session for shares was 20,970,465 and for warrants 6,500.
The credit rating of the Bank performed by three international credit rating agencies is as follows:
Moody's: Caa3
Fitch Ratings: RD
Standard & Poor's: SD (from 2.8.2016 CCC+)
According to Law 4374 published in 1 April 2016, the obligation to publish quarterly financial statements for the first and third quarter of the financial year, pursuant to the provisions of Article 6 of Law. 3556/2007 before its amendment, was abolished.
Furthermore, according to No.8/754/14.04.2016 decision of the Hellenic Capital Market Commission with subject "Special Topics Periodic Reporting according to Law. 3556/2007", the obligation to publish Data and Information arising from the quarterly and semi-annual 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.
The financial statements have been approved by the Board of Directors on 30 August 2016.
Accounting Policies Applied
1.1 Basis of presentation
The Group has prepared the condensed interim financial statements as at 30.6.2016 in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as it has been adopted by the European Union. The financial statements have been prepared on the historical cost basis. As an exception, some assets and liabilities are measured at fair value. Those assets are mainly the following:
- Securities held for trading
- 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 applied by the Group in preparing the condensed interim financial statements are consistent with those stated in the published financial statements for the year ended on 31.12.2015, 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 11 "Joint Arrangements": Accounting for acquisition of interests in joint operations (Regulation 2015/2173/24.11.2015)
Amendment to International Accounting Standard 1 "Presentation of Financial Statements": Disclosure Initiative (Regulation 2015/2406/18.12.2015)
Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and to International Accounting Standard 38 "Intangible Assets": Clarification of Acceptable Methods of Depreciation and Amortization (Regulation 2015/2231/2.12.2015)
Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and to International Accounting Standard 41 "Agriculture": Bearer Plants (Regulation 2015/2113/23.11.2015)
Amendment to International Accounting Standard 27 "Separate Financial Statements": Equity Method in Separate Financial Statements (Regulation 2015/2441/ 18.12.2015)
Improvements to International Accounting Standards - cycle 2012-2014 (Regulation 2015/2343/15.12.2015)
The adoption of the above amendments by the Group, an analysis of which is presented in note 1.1 of the Group Financial Statements as at 31.12.2015, had no impact on its financial statements.
The adoption by the European Union, by 31.12.2016, of new standards, interpretations or amendments, which have been issued or may be issued during the year by the International Accounting Standards Board (IASB), and their mandatory or optional adoption for periods beginning on or after 1.1.2016, may affect retrospectively the periods presented in these interim financial statements.
1.2 Estimates, decision making criteria and significant sources of uncertainty
The Group, in the context of applying accounting policies and preparing financial statements in accordance with the International Financial Reporting Standards, makes estimates and assumptions that affect the amounts that are recognized as income, expenses, assets or liabilities. The use of estimates and assumptions is an integral part of recognizing amounts in the financial statements that mostly relate to the following:
Fair value of assets and liabilities
For assets and liabilities traded in active markets, the determination of their fair value is based on quoted, market prices. In all other cases the determination of fair value is based on valuation techniques that use observable market data to the greatest extent possible. In cases where there is no observable market data, the fair value is determined using data that are based on internal estimates and assumptions eg. determination of expected cash flows, discount rates, prepayment probabilities or potential counterparty default.
Impairment losses of financial assets
The Group, when performing impairment tests on loans and advances to customers, makes estimates regarding the amount and timing of future cash flows. Given that these estimates are affected by a number of factors such as the financial position of the borrower, the net realizable value of any collateral or the historical loss ratios per portfolio, actual results may differ from those estimated. Similar estimates are used in the assessment of impairment losses of securities classified as available for sale or held to maturity.
Impairment losses of non - financial assets
The Group, at each year end balance sheet date, assesses for impairment non - financial assets, and in particular property, plant and equipment, investment property, goodwill and other intangible assets, as well as its investments in associates and joint ventures. Internal estimates are used to a significant degree to determine the recoverable amount of the assets, i.e. the higher between the fair value less costs to sell and the value in use.
Income Tax
The Group recognizes assets and liabilities for current and deferred tax, as well as the related expenses, based on estimates concerning the amounts expected to be paid to or recovered from tax authorities in the current and future periods. Estimates are affected by factors such as the practical implementation of the relevant legislation, the expectations regarding the existence of future taxable profit and the settlement of disputes that might exist with tax authorities etc. Future tax audits, changes in tax legislation and the amount of taxable profit actually realised may result in the adjustment of the amount of assets and liabilities for current and deferred tax and in tax payments other than those recognized in the financial statements of the Group. Any adjustments are recognized within the year that they become final.
Employee defined benefit obligations
Defined benefit obligations are estimated based on actuarial valuations that incorporate assumptions regarding discount rates, future changes in salaries and pensions, as well as the return on any plan assets. Any change in these assumptions will affect the amount of obligations recognized.
Provisions and contingent liabilities
The Group recognises provisions when it estimates that it has a present legal or constructive obligation that can be estimated reliably, and it is almost certain that an outflow of economic benefits will be required to settle the obligation. In contrast, when it is probable that an outflow of resources will be required, or when the amount of liability cannot be measured reliably, the Group does not recognise a provision but it provides disclosures for contingent liabilities, taking into consideration their materiality. The estimation for the probability of the outflow as well as for the amount of the liability are affected by factors which are not controlled by the Group, such as court decisions, the practical implementation of the relevant legislation and the probability of default of the counterparty, for those cases which are related to the exposure to off-balance sheet items.
The estimates and judgments applied by the Group in making decisions and in preparing the financial statements are based on historical information and assumptions which at present are considered appropriate. The estimates and judgments are reviewed on an ongoing basis in order to take into account current conditions, and the effect of any changes is recognized in the period in which the estimates are revised.
1.2.1 Going concern principle
The Group applied the going concern principle for the preparation of the financial statements as at 30.6.2016. For the application of this principle, the Group takes into consideration current economic developments in order to make projections for future economic conditions of the environment in which it operates. The main factors that cause uncertainties regarding the application of this principle relate to the adverse economic environment in Greece and abroad and to the liquidity levels of the Hellenic Republic and the banking system.
Specifically, the high degree of uncertainty that characterizes the internal economic environment in recent years, as a result of the prolonged recession of the Greek economy, led to a significant deterioration in the creditworthiness of corporate and individuals, to an increase of non performing loans and therefore to the recognition of significant impairment losses by the Bank and by the Greek banking system in general. Additionally, during the first semester of the previous year, the internal economic environment was adversely affected by the uncertainties that were created during the negotiations of the Hellenic Republic with the European Commission, the European Central Bank and the International Monetary Fund for the financing of the Hellenic Republic, a fact that led to significant outflows of deposits, to the imposition of capital controls and of a bank holiday which was announced on 28.6.2015 and lasted until 19.7.2015. Capital controls remain in place until the date of approval of the financial statements, while the detailed provisions for their application are amended where appropriate by the adoption of a legislative act.
At the same time the liquidity needs of Greek banks continue to be mostly satisfied by the emergency liquidity mechanisms of the Bank of Greece.
The completion, in the third quarter of 2015, of the negotiations of the Hellenic Republic for the coverage of the financing needs of the Greek economy, led to an agreement for new financial support by the European Stability Mechanism. The agreement provided for the coverage of the financing needs of the Hellenic Republic for the medium-term period, under the condition that economic reforms are made, while additionally it provided for the allocation of resources to cover the recapitalization needs of the banks as a result of their assessment by the Single Supervisory Mechanism. With respect to the Bank specifically, a recapitalization of a total amount of 2,563 million took place in the fourth quarter of 2015, exclusively from private funds, as further analyzed in note 42 of the annual financial statements as at 31.12.2015.
In June of the current year the first evaluation of the Hellenic Republic financial support program was completed and the partial disbursement of the second installment of the program, amounting to 10.3 billion, was approved. The first disbursement of 7.5 billion took place in June and covered the short-term public debt servicing needs as well as the clearance of part of amounts overdue by the Hellenic Republic. The remaining amount of 2.8 billion is expected to be disbursed within the second semester of 2016, provided that a series of prerequisite actions are completed. The completion of the first evaluation and the disbursement of installments are expected to contribute to the enhancement of the real economy and the improvement of investment prospects. The above, combined with the continuation of reforms and the measures described in the Eurogroup statement for the enhancement of the sustainability of the Greek debt (note 1.2.2), are expected to contribute to the gradual improvement of the economic environment in Greece and to the return of the economy to positive growth rates.
In parallel to the above the Bank, in the context of its strategy to address the issue of non performing loans, is taking a series of actions and initiatives, as specifically mentioned in the relevant section of the Board of Director's Semi-annual Management Report, which, combined with the changes in the legislative framework, are expected to contribute to the effective management of the non performing loans portfolio.
With regards to the liquidity levels and funding costs of the Bank and the banking system in general, they have been positively affected by the reinstatement of Greek government securities in the perimeter of collaterals accepted by the European Central Bank, by the reduction of the haircut applied on eligible collaterals and by the ability to transfer part of the securities issued by the European Financial Stability Fund that the Bank holds to the European Central Bank, as mentioned in note 8 of the financial statements.
Based on the above and taking into account the Group's high capital adequacy and the ability of the Bank to access the liquidity mechanisms of the eurosystem, the Group estimates that the conditions for the application of the going concern principle for the preparation of its financial statements are met.
1.2.2 Estimation of the Group's exposure to the Hellenic Republic
The Group's total exposure to Greek Government securities and loans related to the Hellenic Republic has not changed significantly compared to what is stated in note 41.1 of the consolidated financial statements as at 31.12.2015. The main uncertainties regarding the estimations for the recoverability of the Group's total exposure relate to the debt service capacity of the Hellenic Republic, which, in turn, is affected by the development of the macroeconomic environment in Greece and the Eurozone as well as by the levels of liquidity of the Hellenic Republic.
Following the successful outcome of the negotiations of the Hellenic Republic for the coverage of the financing needs of the Greek economy, which were completed with the signing of a relative agreement with the European Stability Mechanism on 19.8.2015, a three-year funding (which could amount to 86 billion) was ensured, provided that specific commitments that relate to the achievement of specific financial targets and the implementation of reforms in the Greek economy will be respected. The financing agreement with the European Stability Mechanism is expected to cover the financing needs of the Hellenic Republic and in parallel to contribute to the growth of the Greek economy. In addition, it was agreed that upon the first positive assessment of the program, which was completed in June of the current year, measures will be taken for Greek debt relief in order to enhance its sustainability.
Pursuant to the above, in the Eurogroup of 9.5.2016 the framework based on which the sustainability of the Greek debt will be assessed was set. In the Eurogroup of 24.5.2016 the measures for the enhancement of the sustainability of the Greek debt were further specified, separately for the short, the medium and the long term. Based on this framework, under the baseline scenario, gross financing needs of the Hellenic Republic should remain below 15% of GDP during the post programme period for the medium term and below 20% of GDP thereafter. By taking these measures, the finalization of which is expected in subsequent meetings of the Eurogroup, it is estimated that the service capacity of the Greek debt will be improved.
Based on the above, the Group has not recognized impairment losses on the Greek Government securities that it holds as at 30.6.2016, however, it assesses the developments relating to the Greek Government debt in conjunction with the market conditions and it reviews its estimations for the recoverability of its total exposure at each reporting date.
1.2.3 Recoverability of deferred tax assets
The Group recognizes deferred tax assets to the extent that it is probable that it will have sufficient future taxable profit available, against which, deductible temporary differences and tax losses carried forward can be utilized. The amount of deferred tax assets recognized in the consolidated financial statements as at 30.6.2016 has not changed significantly compared with the corresponding amount of 31.12.2015. Therefore, what is stated in note 1.31.3 of the annual financial statements of 31.12.2015, regarding the main categories of deferred tax assets recognized is also applicable to these financial statements. In addition, with regards to the methodology applied for the assessment of recoverability of deferred tax assets, what is stated in the above note of the annual financial statements applies, taking also into account the factors that formulated the results of the first semester of the current year.
Income Statement
2. Gains less losses on financial transactions
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Foreign exchange differences
6,000
(14,109)
2,514
4,156
Trading securities
- Bonds
515
1,435
385
397
- Shares
(148)
159
9
7
Investment securities:
- Bonds
14,036
(52,212)
10,231
(68,269)
- Shares
79,760
(458)
74,354
(458)
- Other securities
(1,592)
(23)
(698)
19
From sale of holdings
(1,695)
6,804
(1,705)
(25)
From sales of loans
10,876
(10)
10,876
(10)
Derivative financial instruments
(20,644)
42,834
(7,968)
23,730
Other financial instruments
(27,070)
51,542
(30,999)
50,458
Total
60,038
35,962
56,999
10,005
On June 21, 2016, Visa Inc. completed the acquisition of Visa Europe. According to the relevant contract (as amended on 10.05.2016), the date of completion of the transaction, Visa Inc. purchased from Visa Europe's members the shares they held due to their membership. The price for this acquisition consists of:
i. The payment of a total amount of 12.25 billion upon completion of the transaction.
ii. The distribution of preferred shares.
iii. The payment of the amount of 1 billion on the third anniversary of the closing of the transaction plus interest.
The calculation of the transaction price was based on Visa Europe's net revenue contributed by each member for a specific period of time.
In this context, during the second quarter of the current period, the Group recognized as gains less losses on financial transactions result the amount of 55.6 million which consists of the cash received at the closing of the transaction and the recognition of the present value of the deferred payment on the third anniversary.
In addition, the Group recognized during the year the preference shares of Visa Inc. acquired under the transaction. These shares, which were classified as available for sale, were recognized at a fair value of 16.3 million and recorded in gains less losses on finacial transactions.
"Other financial instruments" includes a loss from Ioniki Hotel Enterprises A.E. valuation of 36.4 million (Note 26).
3. General administrative expenses
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Operating leases of buildings
21,884
22,351
10,836
10,976
Rent and maintenance of EDP equipment
10,224
10,224
5,080
5,201
EDP expenses
15,601
13,768
7,933
6,184
Marketing and advertisement expenses
11,063
10,277
6,558
6,726
Telecommunications and postage
11,981
10,421
6,106
4,784
Third party fees
21,628
23,881
11,990
11,564
Consultants fees
3,376
3,331
1,503
1,833
Contribution to the Deposit guarantee fund - Investment fund and Solvency Fund
31,363
21,461
15,576
10,655
Insurance
6,743
5,142
3,016
2,137
Consumables
3,044
3,138
1,450
1,843
Electricity
5,633
7,044
2,230
3,292
Third party fees for customer acquisition
26
56
18
32
Taxes (VAT, real estate etc)
36,446
37,351
18,714
19,557
Services from collection agencies
13,266
9,418
8,667
4,343
Building and equipment maintenance
4,497
4,473
2,418
2,470
Security
6,301
6,444
3,457
3,250
Cleaning fees
2,748
2,804
1,487
1,492
Other
41,265
45,745
21,808
24,147
Total
247,089
237,329
128,847
120,486
On 23.7.2015 under Law 4335/2015, the European Directive 2014/59 was incorporated in to Greek Law to establish a framework for the recovery and resolution of credit institutions and investment entities. In particular, the Resolution Scheme of Hellenic Deposit and Investment Guarantee Fund (HDIGF) is defined as the National Resolution Fund which within ten years (until 31 December 2024) should gradually, create a reserve equal to at least 1% of the deposits guaranteed by the HDIGF. From 1.1.2016, the Single Resolution Mechanism (SRM) is responsible for the resolution of credit institutions established in country-member states of the Eurozone. It operates in cooperation with the Single Resolution Fund (SRF), which will cover the resolution costs of non-sustainable credit institutions.
According to Law 4335/2015 (Article 98), credit institutions authorized to operate in Greece, including branches operating in third countries, should make at least an annual contribution to the Resolution Fund. According to Law 4370/2016 (Article 36), in case a credit institution enters the Resolution Fund or another ceases its participation in it during the fiscal year, the credit institution is obliged for its regular contribution for the fiscal year in proportion to the time of its operation. In addition with law 4370/2016, the Directive 2014/49 / EU of the European Parliament and the Decision of the Council of 16 April 2014 was incorporated into Greek law which enacts the same rules for all Deposit Guarantee Schemes intended to provide a uniform level of protection to all EU depositors and to ensure the same level of stability as regards the DGS.
The Single Resolution Board, determined that the 2016 contribution for credit institutions may provide irrevocable payment commitments amounting up to 15% of their total obligation which for the Bank amounts to 21 million. These irrevocable payment commitments have to be fully covered by cash collateral. On 20.05.2016, the Bank signed a contract with the Single Resolution Board to provide irrevocable payment commitment and establish the necessary cash collateral for the 2016 contribution.
In the General Administrative Expenses of the first semester of 2015 there was not such contribution.
4. Impairment losses and provisions to cover credit risk
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Impairment losses on loans and advances to customers (note 7)
619,815
2,109,150
360,712
1,680,474
Provisions to cover credit risk relating to off balance sheet items (note 15)
494
2,701
20
(145)
Recoveries
(15,481)
(13,009)
(11,022)
(7,633)
Total
604,828
2,098,842
349,710
1,672,696
The first semester of 2016 significantly burdened from the recognition of impairment losses mainly for a large corporate Group of companies, taking into account the conditions, the ongoing developments and the proposals made for the restructuring of loans until the publication of the financial statements as at 30.6.2016.
Respectively, the a' semester of 2015 was burdened with significant impairment losses, after taking into consideration the special conditions that existed in the Greek economy and affected the recoverability estimations of the loan portfolio, in the respected period and until the date of the publication of the 30.6.2015 financial statements.
5. Income tax
In accordance with Article 1 par 4 of Law 4334/2015 "Urgent prerequisites for the negotiation and conclusion of an agreement with the European Stability Mechanism (ESM)" the corporate income tax rate for legal entities increased from 26% to 29%. The increased rate will apply for profits arising in fiscal years commencing on or after 1 January 2015 on the absence of an explicit definition in the law regarding the retrospective application of income tax rate for profits of fiscal year 2014.
For the Bank's subsidiaries and branches operating in other countries, the applicable nominal tax rates for accounting periods 2015 and 2016 are as follows:
Cyprus 12.5
Bulgaria 10
Serbia 15
Romania 16
FYROM 10
Albania 15
Jersey 10
United Kingdom 20 (from 1.4.2015)
In accordance with article 65A of Law 4174/2013, from 2011, the statutory auditors and audit firms conducting statutory audits to a Societe Anonyme (AE), are obliged to issue an Annual Tax Certificate on the compliance on tax issues. This tax certificate is submitted to the entity being audited within 10 days from the submission of the corporate income tax return, as well as, electronically to the Ministry of Finance, no later than 10 days following the date of the approval of the financial statements from the Ordinary Shareholders General Meeting. For fiscal years 2011 up to 2014 the Bank and its local subsidiaries have obtained the relevant tax certificate without any qualifications on the tax issues covered, whereas for year 2015 the tax audit has been completed and the Bank is expected to receive tax certificate without any qualifications. In accordance with article 56 of Law 4410/3.8.2016 for the fiscal years from 1.1.2016, the issuance of tax certificate is rendered optional.
The income tax in the income statement from continuing operations is analysed in the table below, while the income tax from discontinued operations is analysed in note 26:
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Current
6,809
9,477
3,739
4,753
Deferred
17,638
(318,835)
5,801
(323,332)
Total
24,447
(309,358)
9,540
(318,579)
Deferred tax recognized in the income statement is attributable to temporary differences, the effect of which is analyzed in the table below:
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Debit difference of Law 4046/2012
22,277
19,973
11,139
9,987
Write-offs, depreciation and impairment of fixed assets
6,660
9,874
3,301
5,092
Valuation/impairment of loans
(60,449)
(389,149)
(47,171)
(360,316)
Valuation of loans due to hedging
(640)
(550)
(348)
(334)
Employee defined benefit obligations and insurance funds
25,199
17,075
6,161
(216)
Valuation of derivatives
(6,053)
14,012
(2,569)
7,226
Effective interest rate
(279)
(832)
(87)
(311)
Fair value change of liabilities to credit institutions and other borrowed funds due to fair value hedge
3,471
(2,433)
2,264
(1,060)
Valuation/impairment of bonds and other securities
10,561
25,537
9,857
18,745
Tax losses carried forward
23,952
(29,089)
22,929
(13,126)
Other temporary differences
(7,061)
16,747
325
10,981
Total
17,638
(318,835)
5,801
(323,332)
A reconciliation between the nominal and effective tax rate is provided below:
From 1 January to
30.6.2016
30.6.2015
%
%
Profit/(loss) before income tax
3,896
(1,472,233)
Income tax (weighted average nominal tax rate)
94.74
3,691
25.74
(378,969)
Increase/(decrease) due to:
Non taxable income
(11,252)
0.16
(2,407)
Non deductible expenses
11,708
(2.82)
41,508
Tax losses carried forward
(13.73)
(535)
0.04
(611)
Other tax adjustments
20,835
(2.11)
31,121
Income tax (effective tax rate)
24,447
21.01
(309,358)
From 1 April to
30.6.2016
30.6.2015
%
%
Profit/(loss) before income tax
(8.906)
(1,365,471)
Income tax (weighted average nominal tax rate)
33.69
(3,000)
25.95
(354,342)
Increase/(decrease) due to:
Non taxable income
(10,899)
0.16
(2,177)
Non deductible expenses
48.42
(4,312)
(2.04)
27,892
Tax losses carried forward
4.79
(427)
Other tax adjustments
28,178
(0.74)
10,048
Income tax (effective tax rate)
9,540
23.33
(318.579)
According to article 5 of Law 4303/17.10.2014 "Ratification of the Legislative Act "Emergency legislation to replenish the General Secretary of Revenue upon early termination of office" (A 136) and other provisions", deferred tax assets of legal entities supervised by the Bank of Greece, under article 26 paragraphs 5, 6 and 7 of Law 4172/2013 that have been or will be recognized and are due to the debit difference arising from the PSI and the accumulated provisions and other general losses due to credit risk, with respect to existing amounts up to 31 December 2014, are considered final and settled claims against the State, if, the accounting result for the period, after taxes is a loss based on the audited and approved financial statements by the Ordinary Shareholders' General Meeting.
The inclusion in the Law is implemented by the General Meeting of Shareholders, related to tax assets from 2016 onwards and refers to the fiscal year 2015 and onwards, whereas it is envisaged the end of inclusion in the Law with the same procedure and after obtaining relevant approval from the Regulatory Authority.
According to article 4 of Law 4340/01.11.2015 "Recapitalization of financial institutions and other provisions of the Ministry of Finance" the above were amended regarding the time of the application which is postponed for a year. In addition, the amount of deferred tax asset which is included to the same legislation, is limited to the amount related to the debit charge of PSI and the provisions for credit risk, which have been accounted until 30 June 2015.
On 30 June 2016 the amount of deferred tax assets which is estimated to be within the scope of the aforementioned Law amounts to 3,394,799 (31.12.2015: 3.417.055).
Income tax of other comprehensive income recognized directly in Equity
From 1 January to
30.6.2016
30.6.2015
Before income tax
Income tax
After
income taxBefore income tax
Income tax
After
income taxAmounts that may be reclassified to the Income Statement
Net change in available for sale securities' reserve
(20,838)
3,543
(17,295)
(328,119)
77,920
(250,199)
Net change in cash flow hedge reserve
(127,695)
37,126
(90,569)
63,745
(16,586)
47,159
Foreign exchange differences on translating and hedging the net investment in foreign operations
(1,941)
(2,034)
(3,975)
635
1,229
1,864
Change in the share of other comprehensive income of associates and joint ventures
101
101
Total
(150,474)
38,635
(111,839)
(263,638)
62,563
(201,075)
From 1 April to
30.6.2016
30.6.2015
Before income tax
Income tax
After
income taxBefore income tax
Income tax
After
income taxAmounts that may be reclassified to the Income Statement
Net change in available for sale securities' reserve
73,668
(22,090)
51,578
(127,829)
25,396
(102,433)
Net change in cash flow hedge reserve
(28,443)
7,976
(20,467)
153,944
(40,038)
113,906
Foreign exchange differences on translating and hedging the net investment in foreign operations
1,206
(1,748)
(542)
(1,759)
(653)
(2,412)
Change in the share of other comprehensive income of associates and joint ventures
101
101
Total
46,431
(15,862)
30,569
24,457
(15,295)
9,162
During the first semester of 2016, "Retained earnings" includes a credit tax amount of 281 which derives from the share capital increase expenses which were recognized in the same account and relates to the share capital increase which took place during 2015.
In addition, during the same period, "Retained earnings" includes deferred tax asset amount of 24 which derives from (Purchases)/(Redemptions)/ Sales of hybrid securities. The respective amount for the first semester of 2015 was 251 (deferred tax asset).
6. Earnings / (losses) per share
a. Basic
Basic earnings/(losses) per share are calculated by dividing the profit/(losses) after income tax attributable to ordinary equity owners of the Bank, by the weighted average number of outstanding ordinary shares, after deducting the weighted average number of treasury shares held by the Bank during the period.
For the calculation of basic earnings/(losses) per share, profit or loss for the period is adjusted with the deduction of the after-tax amount of dividends of those preference shares that have been classified in equity. The after-tax amount of preference dividends that is deducted is:
i. The after-tax amount of any dividends of preference shares on non-cumulative dividend preference shares declared for distribution during the period.
ii. The after-tax amount of the dividends from preference shares for cumulative dividend preference shares required for the period, whether or not the dividends have been declared.
b. Diluted
Diluted earnings/(losses) per share is calculated by adjusting the weighted average number of ordinary shares outstanding to the presumed conversion amount of all dilutive potential ordinary shares. The Bank does not have any dilutive potential ordinary shares and in addition, based on the issuance terms of the convertible bond loan with Credit Agricole S.A., basic and dilutive earnings/(losses) per share should not differ.
.
From 1 Januray to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Profit/(loss) attributable to Equity owners of the Bank
(19,043)
(1,252,250)
(16,836)
(1,136,276)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share (in )
(0.0124)
(4.9035)
(0.0110)
(4.4493)
From 1 Januray to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Profit/(loss) from continuing operations attributable to Equity owners of the Bank
(20,650)
(1,163,042)
(18,502)
(1,046,923)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share from continuing operations (in )
(0.0134)
(4.5541)
(0.0120)
(4.0995)
From 1 Januray to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Profit/(loss) from discontinued operations attributable to Equity owners of the Bank
1,607
(89,208)
1,666
(89,353)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share from discontinued operations (in )
0.0010
(0.3493)
0.0011
(0.3499)
The weighted average number of the ordinary shares as at 30.6.2015, has been retrospectively restated from the beginning of the year, after the decrease of the total number of shares due to the merger in proportion of 50 voting common shares of old nominal value to 1 voting common share of new nominal value which took place on November 2015.
Assets
7. Loans and advances to customers
30.6.2016
31.12.2015
Individuals
Mortgages
19,934,735
20,171,970
Consumer:
- Non-securitized
4,155,608
4,063,791
- Securitized
1,243,419
1,299,934
Credit cards:
- Non-securitized
705,031
720,016
- Securitized
544,701
565,583
Other
2,448
2,601
Total
26,585,942
26,823,895
Companies:
Corporate loans:
- Non-securitized
27,627,285
27,547,074
- Securitized
1,997,083
2,126,179
Finance leases (Leasing):
- Non-Securitized
372,291
378,398
- Securitized
313,107
315,201
Factoring
595,384
599,387
Total
30,905,150
30,966,239
Other receivables
325,320
417,737
57,816,412
58,207,871
Less:
Allowance for impairment losses (1)(12,320,450)
(12,021,755)
Total
45,495,962
46,186,116
The Bank and Alpha Leasing A.E. have proceeded in securitization of consumer, corporate loans, credit cards and finance leases through special purpose entities controlled by them.
Based on the contractual terms and structure of the above transactions (e.g. allowance of guarantees or/and credit enhancement or due to the Bank owing the bonds issued by the special purpose entities), the Bank and Alpha Leasing A.E. retained in all cases the risks and rewards deriving from the securitized portfolios.
The Bank proceeded on 8.7.2015 to cancel an amount of 3.75 billion of covered bonds which had been issued and secured with mortgage loans. As at 30.6.2016, the balance of the covered bonds amounts to 5 million (note 13). The book value of mortgage loans provided as coverage for the above mentioned bonds amounted to 16.7 million.
(1) n addition to the allowance for impairment losses regarding loans and advances to customers, a provision of 5,200 (31.12.2015: 4,713) has been recorded to cover credit risk relating to off-balance sheet items. The total provision recorded to cover credit risk amounts to 12,325,650 (31.12.2015: 12,026,468).
Allowance for impairment losses
Balance 1.1.2015
8,830,277
Impairment losses for the period from continuing operations (note 4)
2,109,150
Impairment losses for the period from discontinued operations
534
Transfers of accumulated provisions to assets held for sale
(110,626)
Change in present value of the impairment losses from continuing operations
257,527
Change in present value of the impairment losses from discontinued operations
1,435
Foreign exchange differences
72,139
Loans written-off during the period
(157,712)
Balance 30.6.2015
11,002,724
Changes for the period 1.7. - 31.12.2015
Impairment losses for the period from continuing operations
938,157
Transfers of accumulated provisions to assets held for sale
(1,286)
Change in present value of the impairment losses from continuing operations
290,469
Foreign exchange differences
(17,358)
Loans written-off during the period
(190,951)
Balance 31.12.2015
12,021,755
Changes for the period 1.1. - 30.6.2016
Impairment losses for the period (note 4)
691,815
Transfers of accumulated provisions to assets held for sale
(99,975)
Change in present value of the allowance account
261,047
Sales of impaired loans
(8,596)
Foreign exchange differences
(6,209)
Loans written-off during the period
(467,387)
Balance 30.6.2015
12,320,450
The finance lease receivables by duration are as follows:
30.6.2016
31.12.2015
Up to 1 year
380,876
396,490
From 1 year to 5 years
152,361
136,893
Over 5 years
256,000
265,009
789,237
798,392
Non accrued finance lease income
(103,839)
(104,793)
Total
685,398
693,599
The net amount of finance lease receivables by duration is analyzed as follows:
30.6.2016
31.12.2015
Up to 1 year
364,485
380,421
From 1 year to 5 years
107,716
91,614
Over 5 years
213,197
221,564
Total
685,398
693,599
8. Investment and held for trading securities
i. Held for trading securities
Securities held for trading amounted to 2.6 million on 30.6.2016 (31.12.2015: 2.8 million) out of which Greek government bonds 1.2 million (31.12.2015: 1.9 million).
ii. Investment securities
a. Available for sale
The available for sale portfolio amounted to 5.6 billion as at 30.6.2016 (31.12.2015: 5.8 billion). These amounts include securities issued by the Greek State that amounted to 3.7 billion as at 30.6.2016 (31.12.2015: 3.9 billion) of which 1.9 billion (31.12.2015: 2.1 billion) related to Greek Government treasury bills. The Group during the first semester of 2016 has recognized impairment losses for shares amounting to 1,479 and for mutual funds amounting to 1,596 which are included in "Gains less losses on financial transactions".
b. Held to maturity
The held to maturity portfolio amounts to 44.7 million as at 30.6.2016 (31.12.2015: 79.7 million).
c. Loans and receivables
Loans and receivables include bonds issued by the European Financial Stability Facility (E.F.S.F.) at a nominal value of 3,960,544 received by the Bank as a result of the share capital increase which was completed on 6.6.2013 and of nominal value of 284,628 which were transferred to the Bank from the Hellenic Financial Stability Fund for the undertaking of customer deposits from the former Cooperative Banks of West Macedonia, Evia and Dodecanese in December 2013.
These bonds under the original contract could only be used as collateral to obtain liquidity from the Eurosystem or from interbank counterparties in repos.
In April 2016 the subscription agreement between the European Financial Stability Fund (EFSF), the Hellenic Financial Stability Fund (HFSF) and the Bank was revised. The revision refers to the terms of use of the above bonds. The revision states that the Bank may participate with the EFSF bonds in the purchase programme for the bonds issued by central governments, special bodies-securities issuers and European supranational institutions of the Eurozone (Public Sector Purchase Programme - PSPP) conducted by ECB. According to the ECB's decision, a total up to 50% of each EFSF issue can be purchased until the completion of the program in March 2017. During the first semester of 2016, the Bank conducted sale transactions of EFSF securities at a nominal value of 595 million, under the PSPP program.
The total book value of these bonds on 30.6.2016 was 3.7 billion. (31.12.2015: 4.3 billion.)
9. Investment property
Land - Buildings
Balance 1.1.2015
Cost
693,486
Accumulated depreciation and impairment losses
(126,274)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
567,212
Additions
4,583
Additions from companies consolidated for the first time in the first semester of 2015
43,306
Reclassifications to "Other Assets"
(109)
Reclassification from "Property, plant and equipment"
3,800
Reclassification to "Assets held for sale"
(939)
Reclassification of investment assets from discontinued operations to "Asset held for sale"
(1,268)
Foreign exchange differences
489
Disposals/Write-offs
(5,502)
Depreciation charge for the period from continuing operations
(5,392)
Depreciation charge for the period from discontinued operations
(9)
Net book value 30.6.2015
606,171
Balance 30.6.2015
Cost
750,342
Accumulated depreciation and impairment losses
(144,171)
1.7.2015 - 31.12.2015
Net book value 1.7.2015
606,171
Additions
16,960
Additions from companies consolidated for the first time in the second semester of 2015
47,635
Reclassification from "Property, plant and equipment"
345
Foreign exchange differences
(1,259)
Disposals/Write-offs
(8,334)
Depreciation charge for the period from continuing operations
(5,572)
Impairment losses
(32,284)
Net book value 31.12.2015
623,662
Balance 31.12.2015
Cost
800,910
Accumulated depreciation and impairment losses
(177,248)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
623,662
Additions
40,481
Reclassification to "Assets held for sale"
(40,233)
Reclassification from "Property, plant and equipment"
25,314
Foreign exchange differences
(101)
Disposals/Write-offs
(14,368)
Depreciation charge for the period from continuing operations
(6,465)
Net book value 30.6.2016
628,290
Balance 30.6.2016
Cost
802,219
Accumulated depreciation and impairment losses
(173,929)
In the first semester of 2016 transfers to "Assets held for sale" related mainly to fixed assets of APE Fixed Assets AE.
In 2015, an impairment loss amounting to 32.3 million was recognized, in order for the carrying amount of investment property not to exceed their recoverable amount as at 31.12.2015, as estimated by certified valuators.
The additions from companies consolidated for the first time in 2015 and the additions of the first semester of 2016 mainly relate to investment property which were obtained as collateral for loans and acquired by the Group in the context of its credit risk methodology.
10. Property, plant and equipment
Land and Buildings
Leased Equipment
Equipment
Total
Balance 1.1.2015
Cost
1,417,632
4,302
518,133
1,940,067
Accumulated depreciation and impairment losses
(411,831)
(3,152)
(441,736)
(856,719)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
1,005,801
1,150
76,397
1,083,348
Foreign exchange differences
211
55
266
Additions
3,941
9,970
13,911
Additions from companies consolidated for the first time in
the first semester of 2015
7
7
Additions from discontinued operations
127
70
197
Disposals/Write-offs
(902)
(58)
(960)
Disposals/Write-offs from discontinued operations
(120)
(25)
(145)
Reclassification to "Investment property"
(3,800)
(3,800)
Reclassification of investment assets from discontinued operations to "Asset held for sale"
(3,582)
(2,349)
(5,931)
Reclassification to "Property, plant and equipment"
49
(49)
Reclassification from/to "Other assets"
(5,778)
(18)
41
(5,755)
Depreciation charge for the period from continuing operations
(13,727)
(294)
(9,701)
(23,722)
Depreciation charge for the period from discontinued operations
(410)
(302)
(712)
Net book value 30.6.2015
981,810
838
74,056
1,056,704
Balance 30.6.2015
Cost
1,394,992
4,080
514,877
1,913,949
Accumulated depreciation and impairment losses
(413,182)
(3,242)
(440,821)
(857,245)
1.7.2015 - 31.12.2015
Net book value 1.7.2015
981,810
838
74,056
1,056,704
Foreign exchange differences
(230)
(1)
83
(148)
Additions
3,718
102
7,490
11,310
Additions from companies consolidated for the first time in
the second semester of 2015
942
942
Disposals/Write-offs
(2,809)
(7)
(69)
(2,885)
Reclassification to "Investment property"
(345)
(345)
Reclassification of assets from discontinued operations to "Assets held for sale"
(1,360)
(525)
(1,885)
Reclassification to "Assets held for sale"
(164,166)
(3,088)
(167,254)
Reclassification to "Property, plant and equipment"
615
(615)
Reclassification from/to "Other assets"
(8,324)
(581)
(8,905)
Depreciation charge for the period from continuing operations
(13,738)
(106)
(10,536)
(24,380)
Depreciation charge for the period from discontinued operations
Depreciation charge for the period
(1,929)
(324)
(2,253)
Net book value 31.12.2015
792,627
1,441
66,833
860,901
Balance 31.12.2015
Cost
1,169,294
4,090
472,059
1,645,443
Accumulated depreciation and impairment losses
(376,667)
(2,649)
(405,226)
(784,542)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
792,627
1,441
66,833
860,901
Foreign exchange differences
(450)
(48)
(498)
Additions
3,428
10,710
14,138
Disposals/Write-offs
(1,199)
(3)
(57)
(1,259)
Reclassification to "Investment property"
(25,314)
(25,314)
Reclassification from/to "Other assets"
(3,379)
(467)
544
(3,302)
Depreciation charge from continuing operations
(10,918)
(179)
(9,838)
(20,935)
Net book value 30.6.2016
754,795
792
68,144
823,731
Balance 30.6.2016
Cost
1,135,677
3,334
475,766
1,614,777
Accumulated depreciation and impairment losses
(380,882)
(2,542)
(407,622)
(791,046)
During the current period there was no significant variation in property, plant and equipment.
In 2015, an impairment loss of 2.3 million was recognized for property, plant and equipment and was recorded in "Other Expenses".
11. Goodwill and other intangible assets
Goodwill
Software
Other
Total
Balance 1.1.2015
Cost
488,347
155,103
643,450
Accumulated amortization and impairment loss
(278,559)
(33,467)
(312,026)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
209,788
121,636
331,424
Additions
24,244
24,244
Additions from companies consolidated for the first time in
the first semester of 20152,900
2,900
Additions from discontinued operations
74
74
Reclassification of assets of discontinued operations to "Assets held for sale"
(3,353)
1
(3,352)
Foreign exchange differences
13
13
Amortization for the period from continuing operations
(11,003)
(11,420)
(22,423)
Amortization for the period from discontinued opearations
(240)
(240)
Net book value 30.6.2015
2,900
219,523
110,217
332,640
Balance 30.6.2015
Cost
2,900
506,086
153,827
662,813
Accumulated amortization and impairment loss
(286,563)
(43,610)
(330,173)
1.7.2015 - 31.12.2015
Net book value 1.7.2015
2,900
219,523
110,217
332,640
Additions
36,611
72
36,683
Reclassification of assets of discontinued operations to "Assets held for sale"
(865)
(2)
(867)
Reclassification to "Assets held for sale"
22
22
Foreign exchange differences
185
185
Amortization charge for the period from continued operations
(12,022)
(11,490)
(23,512)
Net book value 31.12.2015
2,900
243,454
98,797
345,151
Balance 31.12.2015
Cost
2,900
544,009
152,363
699,272
Accumulated amortization and impairment loss
(300,555)
(53,566)
(354,121)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
2,900
243,454
98,797
345,151
Additions
43,205
43,205
Foreign exchange differences
(38)
1
(37)
Amortization charge for the period from continuing operations
(12,949)
(9,146)
(22,095)
Net book value 30.6.2016
2,900
273,672
89,652
366,224
Balance 30.6.2016
Cost
2,900
586,672
152,192
741,764
Accumulated amortization and impairment loss
(313,000)
(62,540)
(375,540)
The additions of the first semester of 2016 mainly concern acquisitions of user rights for computer applications.
In 2015 the goodwill amounting to 2.9 million relates to the acquired company Asmita Gardens SLR during the first semester of 2015 after the restatement, following the completion of valuation of its assets (note 28).
Liabilities
12. Due to Banks
30.6.2016
31.12.2015
Deposits:
- Current accounts
36,079
112,482
- Term deposits:
Central Banks
22,671,359
24,404,828
Other credit institutions
25,945
17,408
Cash collateral for derivative margin account
28,703
56,960
Sale of repurchase agreements (Repos)
400,540
269,292
Borrowing funds
252,162
252,123
Deposits redeemable at notice:
- Other credit institutions
2,881
2,270
Total
23,417,669
25,115,363
Eurosystem funding decreased by 1.7 billion during the first semester of 2016 mainly due to the sale of EFSF bonds through the PSPP programme (note 8), new repurchase agreements (Repos). In June 2016, European Central Bank
carried out a new program of targeted long term refinancing operations (TLTRO-II) with a four year duration. The Bank participates in the above program with an amount of 1 billion.13. Debt securities in issue and other borrowed funds
i. Issues quaranteed by the Greek State (Law 3723/2008)
Under the programme for the enhancement of the Greek's economy's liquidity, according to Law 3723/2008, the first semester of 2016 the Bank proceeded to the issuance of senior debt securities guaranteed by the Greek State amounting to 5.15 billion while the maturities/redemptions for the same period amounted to 9.22 billion.
The total balance of senior debt securities guaranteed by the Greek State as at 30.6.2016 amounts to 5.15 billion (31.12.2015: 9.22 billion).
These securities are not included in the "Debt securities in issue and other borrowed funds", as they are held by the Group.
ii. Covered bonds (1)
Covered bonds are not included in caption "Debt securities in issue and other borrowed funds" as these securities are held by the Group.
The total balance of covered bonds as at 30.6.2016 amounts to 5 million
iii. Senior debt securities
Balance 1.1.2016
29,742
Changes for the period 1.1 - 30.6.2016
Maturities/Repayments
(2,873)
Fair value change
38
Accrued interest
(7)
Foreign exchange differences
(81)
Balance 30.6.2016
26,819
On 23.5.2016 an early redemption of senior debt security with a nominal value of USD 3 million took place.
(1) Financial disclosures regarding covered bond issues, as determined by the 2620/28.08.2009 Act of the Bank of Greece have been published on the Bank's website.
iv. Liabilities from the securitization of shipping loans
Balance 1.1.2016
340,272
Changes for the period 1.1 - 30.6.2016
Maturities/Repayments
(62,560)
Accrued interest
4,411
Foreign exchange differences
(6,839)
Balance 30.6.2016
275,284
The Bank proceeded to a shipping loan securitization transaction, transferring them to the fully consolidated Special Purpose Entity, Alpha Shipping Finance Ltd, which raised funding from third parties. The liability of the Group to third parties on 30.6.2016 amounts to 275.3 million.
v. Liabilities from the securitization of other loans
Liabilities arising from the securitisation of consumer loans, corporate loans, credit cards and leasing are not included in "Debt securities in issue and other borrowed funds" since these securities of nominal value 4.2 billion have been issued by special purpose entities and are held by the Bank.
vi. Subordinated debt
1. Subordinated debt (Lower Tier II, Upper Tier II)
Balance 1.1.2016
100,270
Changes for the period 1.1 - 30.6.2016
(Repurchases)/sales
(17,753)
Accrued interest
(16)
Balance 30.6.2016
82,501
2. Convertible bond loan
Balance 1.1.2016
24,600
Changes for the period 1.1 - 30.6.2016
Fair value change
(9,300)
Balance 30.6.2016
15,300
The convertible bond concerns to bond issuance with nominal value 150 million issued by the Bank on 1.2.2013 under an agreement with Credit Agricole SA for the acquisition of former Emporiki Bank. The valuation of the liability from the convertible bond was recognized in Gains less losses on financial transactions and amounted to 9.3 million gain.
Total of debt securities in issue and other borrowed funds as at 30.6.2016
399,904
Of the above debt securities in issue amounting to 399,904 an amount of 79,460 (31.12.2015: 94,155) held by Group customers has been reclassified to "Due to customer". Therefore, the balance of "Debt securities in issue held by institutional investors and other borrowed funds" as at 30.6.2016, amounts to 320,444 (31.12.2015: 400,729).
14. Employee defined benefit obligations
The decrease of defined benefit obligations by 20.9 million compared to 31.12.2015 relates mainly to the partial payment of a recognized liability to the Employees Supplementary Funds (TAP) of former Alpha Credit Bank. More specifically, on 20.5.2016 the General Meeting of the representatives of TAP's members decided the liquidation of TAP under the terms of the agreement signed on 21.4.2016 between the Bank, the Staff Association and TAP. Within this context the Bank paid in the second quarter of 2016 an amount of 24 million to TAP and the relevant liability amounts to 4.8 million against 27.4 million as at 31.12.2015. The final settlement of the liability is estimated that will take place during the current year.
15. Provisions
30.6.2016
31.12.2015
Insurance
197,682
168,818
Provisions to cover credit risk and other provisions
138,286
129,640
Total
335,968
298,458
a. Insurance
30.6.2016
31.12.2015
Life insurance
Mathematical reserves
197,682
168,629
Outstanding claim reserves
189
Total
197,682
168,818
b. Provisions to cover credit risk and other provisions
Balance 1.1.2015
80,501
Changes for the period 1.1 - 30.6.2015
Reclassification of provisions from Bulgaria branch to "Liabilities related to assets held for sale"
(780)
Provisions to cover credit risk relating to off-balance sheet items (note 4)
2,701
Other provisions for the period
1,249
Other provisions for companies consolidated for the first time
2,444
Other provisions used during the period
(4,560)
Write-offs
(612)
Foreign exchange differences
6
Balance 30.6.2015
80,949
Changes for the period 1.7 - 31.12.2015
Reclassification of provisions from Ionian Hotel Enterpises to "Liabilities related to assets held for sale"
(54)
Provisions to cover credit risk relating to off-balance sheet items
(13,409)
Other provisions for the period
851
Other provisions used during the period
(3,503)
Provision for voluntary separation scheme
64,300
Write-offs
612
Foreign exchange differences
(106)
Balance 31.12.2015
129,640
Changes for the period 1.1. - 30.6.2016
Provisions to cover credit risk relating to off-balance sheet items (note 4)
494
Provision for voluntary separation scheme
30,993
Used provision for voluntary separation scheme
(30,993)
Other provisions for the period
11,212
Other provisions used during the period
(3,094)
Foreign exchange differences
34
Balance 30.6.2016
138,286
The amounts of other provisions charged to the profit and loss account are included in "Other Expenses" of the income statement.
On 30.6.2016 the balance of provisions to cover credit risk relating to off-balance sheet items amounts to 5.2 million and other provisions to 132.9 million out of which:
An amount of 34.8 million relates to pending legal cases.
An amount of 64.3 million relates to provision of voluntary separation scheme of Alpha Bank A.E. As analyzed in the 31.12.2015 Annual Financial Report (note 7) Alpha Bank A.E. has recorded within 2015 that provision within the context of the implementation of the updated restructuring plan and its relevant commitments.
During the first quarter, Alpha Bank Cyprus prepared a voluntary separation scheme, aiming to achieve substantial benefit in operational costs. The Group recognized during the first quarter a provision of amount 31 million for the expected cost, which has been used during the second quarter for the compensations. The final cost amounted to 31,5 million.
Equity
16. Share capital and Retained earnings
a. Share capital
On 30.6.2016 the Bank's share capital amounts to 461,064,360, divided to 1,536,881,200 shares, out of which:
a) 1,367,706,054 common, registered, voting, non-paper shares of nominal value 0.30 each.
b) 169,175,146 common, registered, voting, pursuant to restrictions of the article 7a of Law 3864/2010, non paper shares owned by the Hellenic Financial Stability Fund of nominal value 0.30 each.
b) Retained earnings
Since 2015 there were no distributable profits, in accordance with article 44a of Codified Law 2190/1920, the Ordinary General Meeting of Shareholders on 30.6.2016 decided the non-distribution of dividends to ordinary shareholders of the Bank.
17. Hybrid securities
30.6.2016
31.12.2015
Perpetual with 1st call option on 18.2.2015 and annually
15,232
15,232
Securities held by Group companies
(100)
-
Total
15,132
15,232
Additional Information
18. Contingent liabilities and commitments
a. Legal cases
The Group, in the ordinary course of business, is defendant in claims from customers and other legal proceedings. According to the estimations of the Legal Department, the ultimate settlement of these matters is not expected to have a material effect on the financial position or the operations of the Group.
The Group on 30.6.2016 has recorded a provision for pending legal cases amounting to 34.8 million which is included in "Provisions" in Balance Sheet.
b. Tax issues
Alpha Bank has been audited by the tax authorities for the years up to and including 2009. For the years 2011 up to 2014 it has obtained a tax certificate with no qualifications. Former Emporiki Bank has been audited by the tax authorities for the years up to and including 2008. For the years 2011 up to 2013 it has obtained a tax certificate with no qualifications.
The Bank's branches in London and Bulgaria have been audited by the tax authorities up to and including the years 2013 and 2015 respectively. Emporiki Bank's Cyprus branch has not been audited by the tax authorities since the commencement of its operations (year 2011), until its deletion from Department of Registrar of Companies of Cyprus (August 2015), meanwhile it has ceased its operations since September 2014.
On 2.6.2015, the merger via absorption of Diners Club of Greece A.E.P.P was completed. Diners Club of Greece A.E.P.P. has been audited by the tax authorities for the years up to and including 2010. For the years 2011 up to 2013 it has obtained a tax certificate with no qualifications.
Additional taxes and penalties may be imposed for the unaudited years due to the fact that some expenses may not be recognized as deductible by the tax authorities.
The Group's subsidiaries have been audited by the tax authorities up to and including the year indicated in the table below:
Name
Year
Banks
1. Alpha Bank London Ltd (voluntary settlement of tax obligation)
2013
2. Alpha Bank Cyprus Ltd (tax audit is in progress for years from 2008 - 2011)
2007
3. Alpha Bank Romania S.A.
2006
4. Alpha Bank AD Skopje (the company was transfered on 10.5.2016)
2009
5. Alpha Bank Srbija A.D.
2004
6. Alpha Bank Albania SH.A.
2011
Leasing companies
1. Alpha Leasing A.E. ** ( tax audit is in progress for years from 2008 - 2010)
2007
2. Alpha Leasing Romania IFN S.A.
2007
3. ABC Factors A.E. ** (tax audit is in progress for the year 2010)
2009
Investment Banking
1. Alpha Finance A.EP... **/***
2009
2. SSIF Alpha Finance Romania S.A.
2002
3. Alpha .. Investment Holdings **/***
2009
4. Alpha .. Ventures Capital Management - S **/***
2009
5. Emporiki Ventures Capital Developed Markets Ltd
2007
6. Emporiki Ventures Capital Emerging Markets Ltd
2008
Asset Management
1. Alpha Asset Management ..D... **/***
2009
2. ABL Independent Financial Advisers Ltd (voluntary settlement of tax obligation)
2013
Insurance
1. Alpha Insurance Brokers .. **/***
2009
2. Alpha Insurance Brokers S.R.L.
2005
3. Alphalife A.A.E.Z. **/***
2009
** These companies received tax certificate for the years 2011, 2012 and 2013 without any qualification (note 5).
*** These companies have been audited by the tax authorities up to and including 2009 in accordance with Law 3888/2010 which relates to voluntary settlement for the unaudited tax years.
Name
Year
Real estate and hotel
1. Alpha Astika Akinita ..**
2009
2. Ioniki Hotel Enterprises ** (tax audit is in progress for the year 2011)
2010
3. Oceanos ..... **/***
2009
4. Emporiki Development and Real Estate Management ..
2008
5. Alpha Real Estate D.O.O. Beograd
2008
6. Alpha Astika Akinita D.O.O.E.L. Skopje
2005
7. Alpha Real Estate Bulgaria E.O.O.D. (commencement of operation 2007)
*
8. Chardash Trading E.O.O.D. (commencement of operation 2006)
*
9. Alpha Real Estate Services S.R.L. (commencement of operation 1998)
*
10. Alpha Investment Property Chalandriou .. (commencement of operation 2012)
* *
11. Alpha Investment Property Attikis . (commencement of operation 2012)
* *
12. Alpha Investment Property Attikis .. (commencement of operation 2012)
* *
13. Alpha Investment Property Amarousion .. (commencement of operation 2012)
* *
14. Alpha Investment Property Amarousion I .. (commencement of operation 2012)
* *
15. AGI-RRE Participations 1 S.R.L. (commencement of operation 2010)
*
16. AGI-BRE Participations 1 E.O.O.D. (commencement of operation 2012)
*
17. Stockfort Ltd (commencement of operation 2010)
*
18. Romfelt Real Estate SA (commencement of operation 1991)
*
19. AGI-RRE Zeus S.R.L. (commencement of operation 2012)
*
20. AGI-RRE Athena S.R.L. (commencement of operation 2012)
*
21. AGI-RRE Poseidon S.R.L. (commencement of operation 2012)
*
22. AGI-RRE Hera S.R.L. (commencement of operation 2012)
*
23. AGI-BRE Participations 2 E.O.O.D. (commencement of operation 2012)
*
24. AGI-BRE Participations 2BG E.O.O.D. (commencement of operation 2012)
*
25. AGI-BRE Participations 3 E.O.O.D. (commencement of operation 2012)
*
26. AGI-BRE Participations 4 E.O.O.D. (commencement of operation 2012)
*
27. APE Fixed Assets A.E.**/***
2009
28. SC Cordia Residence S.R.L.
2011
29. HT-1 E.O.O.D (commencement of operation 2013)
*
30. AGI-RRE Venus S.R.L. (commencement of operation 2014)
*
31. AGI-RRE Cleopatra S.R.L. (commencement of operation 2014)
*
32. AGI-RRE Hermes S.R.L. (commencement of operation 2014)
*
33. SC Carmel Residential S.R.L. (commencement of operation 2013)
*
34. Alpha Investment Property Neas Kifissias .. (commencement of operation 2014)
*
35. Alpha Investment Property Kallirois .. (commencement of operation 2014)
*
36. Alpha Investment Property Livadias .. (commencement of operation 2014)
*
37. AGI-SRE Ariadni DOO (commencement of operation 2015)
*
38. Alpha Investment Property Kefalariou .. (commencement of operation 2015)
*
39. Alpha Investment Property Neas Erythreas .. (commencement of operation 2015)
*
40. Anaplasis Plagias .. (commencement of operation 2011)
*
41. Asmita Gardens S.R.L.
2010
42. Ashtrom Residents S.R.L. (commencement of operation 2006)
*
43. Cubic Center Development S.A. (commencement of operation 2010)
*
44. AGI-BRE Participations 5 EOOD (commencement of operation 2015)
*
45. AGI-SRE Participations 1 DOO (commencement of operation 2016)
*
Special purpose and holding entities
1. Alpha Credit Group Plc (voluntary settlement of tax obligation)
2013
2. Alpha Group Jersey Ltd
****
3. Alpha Group Investments Ltd (commencement of operation 2006)
*
4. Ionian Holdings ..**/***
2009
5. Ionian Equity Participations Ltd (commencement of operation 2006)
*
6. Emporiki Group Finance Plc (voluntary settlement of tax obligation)
2013
7. AGI-BRE Participations 1 Ltd (commencement of operation 2009)
*
8. AGI-RRE Participations 1 Ltd (commencement of operation 2009)
*
9. Alpha Group Ltd (commencement of operation 2012)
*
10. Katanalotika Plc (voluntary settlement of tax obligation)
2013
11. Epihiro Plc (voluntary settlement of tax obligation)
2013
* These companies have not been audited by the tax authorities since the commencement of their operations.
** These companies received tax certificate for the years 2011, 2012 and 2013 without any qualification (note 5).
*** These companies have been audited by the tax authorities up to and including 2009 in accordance with Law 3888/2010 which relates to voluntary settlement for the unaudited tax years.
**** These companies are not subject to a tax audit.
Name
Year
12. Irida Plc (voluntary settlement of tax obligation)
2013
13. Pisti 2010-1 Plc (voluntary settlement of tax obligation)
2013
14. Alpha Shipping Finance Ltd (commencement of operation 2014)
*
15. AGI-RRE Athena Ltd (commencement of operation 2011)
*
16. AGI-RRE Poseidon Ltd (commencement of operation 2012)
*
17. AGI-RRE Hera Ltd (commencement of operation 2012)
*
18. Umera Ltd (commencement of operation 2012)
*
19. AGI-BRE Participations 2 Ltd (commencement of operation 2011)
*
20. AGI-BRE Participations 3 Ltd (commencement of operation 2011)
*
21. AGI-BRE Participations 4 Ltd (commencement of operation 2010)
*
22. Alpha Real Estate Services Ltd (commencement of operation 2010)
*
23. AGI-RRE Ares Ltd (commencement of operation 2010)
*
24. AGI-RRE Venus Ltd (commencement of operation 2012)
*
25. AGI-RRE Artemis Ltd (commencement of operation 2012)
*
26. AGI-BRE Participations 5 Ltd (commencement of operation 2012)
*
27. AGI-RRE Cleopatra Ltd (commencement of operation 2013)
*
28. AGI-RRE Hermes Ltd (commencement of operation 2013)
*
29. AGI-Cypre Arsinoe Ltd (commencement of operation 2013)
*
30. AGI-SRE Ariadni Ltd (commencement of operation 2014)
*
31. Zerelda Ltd (commencement of operation 2012)
*
32. AGI-Cypre Alaminos Ltd (commencement of operation 2014)
*
33. AGI-Cypre Tochni Ltd (commencement of operation 2014)
*
34. AGI-Cypre Evagoras Ltd (commencement of operation 2014)
*
35. AGI-Cypre Tersefanou Ltd (commencement of operation 2014)
*
36. AGI-Cypre Mazotos Ltd (commencement of operation 2014)
*
37. AGI-Cypre Ermis Ltd (commencement of operation 2014)
*
38. AGI-SRE Participations 1 Ltd (commencement of operation 2016)
*
Other companies
1. Alpha Bank London Nominees Ltd
****
2. Alpha Trustees Ltd (commencement of operation 2002)
*
3. Flagbright Ltd
****
4. Kafe Alpha A.E.**/***
2009
5. Alpha Supporting Services ..**/*** (tax audit is in progress for the year 2012)
2009
6. Real Car Rental A.E.**/***
2009
7. Evisak ..**/***
2009
8. Emporiki Management ..***
2009
9. Alpha Bank Notification Services .. (commencement of operation 2015)
*
c. Operating leases
The Group's minimum future lease payments are:
30.6.2016
31.12.2015
- less than one year
42,702
43,930
- between one and five years
108,697
112,402
- over five years
158,184
164,421
Total
309,583
320,753
The minimum future lease fees are:
30.6.2016
31.12.2015
- less than one year
11,386
10,423
- between one and five years
42,015
41,694
- over five years
44,094
46,474
Total
97,495
98,591
* These companies have not been audited by the tax authorities since the commencement of their operations.
** These companies received tax certificate for the years 2011, 2012 and 2013 without any qualification (note 5).
*** These companies have been audited by the tax authorities up to and including 2009 in accordance with Law 3888/2010 which relates to voluntary settlement for the unaudited tax years.
**** These companies are not subject to a tax audit.
d. Off balance sheet liabilities
The Group pursuant to its normal operations, is bound by contractual commitments, that in the future may result to changes in its asset structure. These commitments are monitored in off balance sheet accounts and relate to letters of credit, letters of guarantee, undrawn credit facilities and credit limits.
Letters of credit are used to facilitate trading activities and relate to the financing of contractual agreements for the transfer of goods domestically or abroad, by undertaking the direct payment on behalf of the third party bound by the agreement on behalf of the Group's client. Letters of credit, as well as letters of guarantee, are commitments under specific terms and are issued by the Group for the purpose of ensuring that its clients will fulfill the terms of their contractual obligations.
The outstanding balances are as follows:
30.6.2016
31.12.2015
Letters of credit
33,888
35,159
Letters of guarantee and other guarantees
3,642,314
3,940,146
In addition, contingent liabilities for the Group arise from undrawn loan agreements and credit limits that may not be fulfilled immediately or may be partly fulfilled as long as the agreed upon requirements are fulfilled by counterparties.
The liability from limits that can not be recalled (committed) in case where counterparties fail to meet their contractual obligations as at 30.6.2016 amounts to 415.5 million (31.12.2015: 278.9 million) and are included in the calculation of risk weighted assets.
e. Assets pledged
Assets pledged, as at 30.6.2016 are analyzed as follows:
Deposits pledged amounting to 1 billion concerning the Group's obligation to maintain deposits in Central Banks according to ratios determined in the respective country.
Deposits pledged amounting to 0.2 billion concerning guarantees provided on behalf of the Greek State.
Deposits pledged to credit institutions amounting to 1.3 billion which have been provided as guarantee for derivative transactions.
Deposits pledged to credit institutions amounting to 0.06 billion which have been provided for Letter of Credit or Guarantee Letters issued by the Bank in order to facilitate clients' imports.
Deposits of 3 million were pledged to the Resolution Fund as irrevocable payment commitment for a part of 2016 contribution. The commitment has to be fully secured by cash as decided by the Single Resolution Board.
Loans and advances to customers:
i. amount of nominal value of 22.1 billion pledged to Central Banks for liquidity purposes.
ii. a carrying amount of 3.3 billion, which relates to corporate, consumer loans and credit cards, has been securitized for the issuance of Special Purpose Entities' bonds of a nominal value of 4.2 billion, which are held by the Bank and pledged to Central Banks for liquidity purposes.
iii. a carrying amount of 0.6 billion, which relates to shipping loans, has been securitized for the purpose of financing the Bank through a Special Purpose Entitiy, which amounts to 0.3 billion at 30.6.2016.
iv. an amount of nominal value of 0.1 billion has been pledged for other loan facilities.
Securities held for trading and investment securities portfolio:
i. An amount of nominal value of 3.54 billion of Greek Government securities, of which a nominal amount of 3.5 billion has been pledged to Central Banks for liquidity purposes, while Greek State securities of a nominal amount of 0.04 billion has been pledged for other loan facilities.
ii. An amount of nominal value of 3.65 billion relates to securities issued by the European Financial Stability Facility (EFSF), received from the Bank by the HFSF in the context of: a) its participation to the share capital increase that was completed on 6.6.2013, and, b) due to the coverage of the difference between the values of assets and liabilities transferred from Cooperative Banks, out of which an amount of 3.39 billion is pledged as collateral to Central Banks for participation in main refinancing operations and an amount of 0.26 billion has been given as collateral for other loan facilities.
iii. An amount of 0.4 billion of other corporate securities has been given as a collateral of repo agreements.
In addition an amount of nominal value of 5.2 billion that relates to securities issued under the guarantee of the Greek State in accordance with Law 3723/2008 and are held by the Bank, a) out of which an amount of 5 billion has been pledged as collateral to Central Banks for raising liquidity purposes and b) an amount of 0.2 billion has been given as collateral for other loan facilities.
19. Group Consolidated Companies
The consolidated financial statements, apart from the parent company Alpha Bank include the following entities:
. SUBSIDIARIES
Name
Country
Group's ownership interest %
30.6.2016
31.12.2015
Banks
1. Alpha Bank London Ltd
United Kingdom
100.00
100.00
2. Alpha Bank Cyprus Ltd
Cyprus
100.00
100.00
3. Alpha Bank Romania S.A.
Romania
99.92
99.92
4. Alpha Bank AD Skopje (27h)
FYROM
100.00
5. Alpha Bank Srbija A.D.
Serbia
100.00
100.00
6. Alpha Bank Albania SH.A.
Albania
100.00
100.00
Leasing Companies
1. Alpha Leasing A.E.
Greece
100.00
100.00
2. Alpha Leasing Romania IFN S.A.
Romania
100.00
100.00
3. ABC Factors A.E.
Greece
100.00
100.00
Investment Banking
1. Alpha Finance A.E.P...
Greece
100.00
100.00
2. SSIF Alpha Finance Romania S.A.
Romania
100.00
100.00
3. Alpha .. Investment Holdings
Greece
100.00
100.00
4. Alpha A.E. Ventures Capital Management - S
Greece
100.00
100.00
5. Emporiki Ventures Capital Developed Markets Ltd
Cyprus
100.00
100.00
6. Emporiki Ventures Capital Emerging Markets Ltd
Cyprus
100.00
100.00
Asset Management
1. Alpha Asset Management ..D...
Greece
100.00
100.00
2. ABL Independent Financial Advisers Ltd
United Kingdom
100.00
100.00
Insurance
1. Alpha Insurance Agents ..
Greece
100.00
100.00
2. Alpha Insurance Brokers S.R.L.
Romania
100.00
100.00
3. Alphalife A.A.E.Z.
Greece
100.00
100.00
Real estate and hotel
1. Alpha Astika Akinita ..
Greece
93.17
93.17
2. Ionian Hotel Enterprises ..
Greece
97.27
97.27
3. Oceanos .....
Greece
100.00
100.00
4. Emporiki Development and Real Estate Management .
Greece
100.00
100.00
5. Alpha Real Estate D.O.O. Beograd
Serbia
93.17
93.17
6. Alpha Astika Akinita D.O.O.E.L. Skopje
FYROM
93.17
93.17
7. Alpha Real Estate Bulgaria E.O.O.D.
Bulgaria
93.17
93.17
8. Chardash Trading E.O.O.D.
Bulgaria
93.17
93.17
9. Alpha Real Estate Services S.R.L.
Romania
93.17
93.17
10. Alpha Investment Property Chalandriou .. (27d)
Greece
100.00
100.00
11. Alpha Investment Property Attikis ..
Greece
100.00
100.00
12. Alpha Investment Property Attikis II ..
Greece
100.00
100.00
13. Alpha Investment Property Amarousion .. (27d)
Greece
100.00
100.00
14. Alpha Investment Property Amarousion I .. (27d)
Greece
100.00
100.00
15. AGI-RRE Participations 1 S.R.L.
Romania
100.00
100.00
16. AGI-BRE Participations 1 E.O.O.D.
Bulgaria
100.00
100.00
Name
Country
Group's ownership interest %
30.6.2016
31.12.2015
17. Stockfort Ltd
Cyprus
100.00
100.00
18. Romfelt Real Estate S.A.
Romania
98.86
98.86
19. AGI-RRE Zeus S.R.L.
Romania
100.00
100.00
20. AGI-RRE Athena S.R.L.
Romania
100.00
100.00
21. AGI-RRE Poseidon S.R.L.
Romania
100.00
100.00
22. AGI-RRE Hera S.R.L.
Romania
100.00
100.00
23. AGI-BRE Participations 2 E.O.O.D.
Bulgaria
100.00
100.00
24. AGI-BRE Participations 2BG E.O.O.D.
Bulgaria
100.00
100.00
25. AGI-BRE Participations 3 E.O.O.D.
Bulgaria
100.00
100.00
26. AGI-BRE Participations 4 E.O.O.D.
Bulgaria
100.00
100.00
27. APE Fixed Assets ..
Greece
72.20
72.20
28. SC Cordia Residence S.R.L.
Romania
100.00
100.00
29. -1 E.O.O.D.
Bulgaria
100.00
100.00
30. AGI-RRE Venus S.R.L. *
Romania
100.00
100.00
31. AGI-RRE Cleopatra S.R.L. *
Romania
100.00
100.00
32. AGI-RRE Hermes S.R.L. *
Romania
100.00
100.00
33. SC Carmel Residential S.R.L.
Romania
100.00
100.00
34. Alpha Investment Property Neas Kifisias ..(27d)
Greece
100.00
100.00
35. Alpha Investment Property Kallirois .. (27d)
Greece
100.00
100.00
36. Alpha Investment Property Livadias ..
Greece
100.00
100.00
37. AGI-SRE Ariadni DOO
Serbia
100.00
100.00
38. Asmita Gardens SRL (27k)
Romania
100.00
100.00
39. Alpha Investment Property Kefalariou ..
Greece
100.00
100.00
40. Ashtrom Residents S.R.L.
Romania
100.00
100.00
41. AGI-BRE Participations 5 E.O.O.D. *
Bulgaria
100.00
100.00
42. Cubic Center Development S.A.
Romania
100.00
100.00
43. Alpha Investment Property Neas Erythreas ..
Greece
100.00
100.00
44. Anaplasis Plagias ..
Greece
100.00
100.00
45. AGI-SRE Participations 1 DOO (27l)
Serbia
100.00
Special purpose and holding entities
1. Alpha Credit Group Plc
United Kingdom
100.00
100.00
2. Alpha Group Jersey Ltd
Jersey
100.00
100.00
3. Alpha Group Investments Ltd (27c, 27d, 27g, 27i)
Cyprus
100.00
100.00
4. Ionian Holdings ..
Greece
100.00
100.00
5. Ionian Equity Participations Ltd
Cyprus
100.00
100.00
6. Emporiki Group Finance Plc
United Kingdom
100.00
100.00
7. AGI-BRE Participations 1 Ltd
Cyprus
100.00
100.00
8. AGI-RRE Participations 1 Ltd (27k)
Cyprus
100.00
100.00
9. Alpha Group Ltd
Cyprus
100.00
100.00
10. Katanalotika Plc
United Kingdom
11. Epihiro Plc
United Kingdom
12. Irida Plc
United Kingdom
13. Pisti 2010-1 Plc
United Kingdom
14. Alpha Shipping Finance Ltd
United Kingdom
15. AGI - RRE Athena Ltd
Cyprus
100.00
100.00
16. AGI - RRE Poseidon Ltd
Cyprus
100.00
100.00
17. AGI - RRE Hera Ltd
Cyprus
100.00
100.00
18. Umera Ltd
Cyprus
100.00
100.00
19. AGI-BRE Participations 2 Ltd
Cyprus
100.00
100.00
20. AGI-BRE Participations 3 Ltd
Cyprus
100.00
100.00
21. AGI-BRE Participations 4 Ltd
Cyprus
100.00
100.00
22. Alpha Real Estate Services Ltd
Cyprus
100.00
100.00
23. AGI-RRE Ares Ltd
Cyprus
100.00
100.00
24. AGI-RRE Venus Ltd
Cyprus
100.00
100.00
25. AGI-RRE Artemis Ltd
Cyprus
100.00
100.00
26. AGI-BRE Participations 5 Ltd
Cyprus
100.00
100.00
27. AGI-RRE Cleopatra Ltd
Cyprus
100.00
100.00
28. AGI-RRE Hermes Ltd
Cyprus
100.00
100.00
* The companies do not have economic activity.
Name
Country
Group's ownership interest %
30.6.2016
31.12.2015
29. AGI-RRE Arsinoe Ltd
Cyprus
100.00
100.00
30. AGI-SRE Ariadni Ltd
Cyprus
100.00
100.00
31. Zerelda Ltd
Cyprus
100.00
100.00
32. AGI-Cypre Alaminos Ltd
Cyprus
100.00
100.00
33. AGI-Cypre Tochni Ltd
Cyprus
100.00
100.00
34. AGI-Cypre Evagoras Ltd
Cyprus
100.00
100.00
35. AGI-Cypre Tersefanou Ltd
Cyprus
100.00
100.00
36. AGI-Cypre Mazotos Ltd
Cyprus
100.00
100.00
37. AGI-Cypre Ermis Ltd
Cyprus
100.00
100.00
38. AGI-SRE Participations 1 Ltd (27g, 27l)
Cyprus
100.00
Other companies
1. Alpha Bank London Nominees Ltd
United Kingdom
100.00
100.00
2. Alpha Trustees Ltd
Cyprus
100.00
100.00
3. Kafe Alpha A.E.
Greece
100.00
100.00
4. Alpha Supporting Services ..
Greece
100.00
100.00
5. Real Car Rental A.E.
Greece
100.00
100.00
6. Evisak ..
Greece
85.71
85.71
7. Emporiki Management ..
Greece
100.00
100.00
8. Alpha Bank Notification Services ..
Greece
100.00
100.00
b. Joint ventures
Name
Country
Group's ownership interest %
30.6.2016
31.12.2015
1. APE Commercial Property ..
Greece
72.20
72.20
2. APE Investment Property A.E.
Greece
72.80
72.80
3. Alpha ...S. (27b)
Greece
51.00
51.00
4. Rosequeens Properties Ltd.
Cyprus
33.33
33.33
5. Aktua Hellas Holdings .. (27a, 27e, 27f)
Greece
45.00
APE Investment Property prepares consolidated financial statements, in which the subsidiaries SYMET SA, Astakos Terminal SA, Akaport SA and NA.VI.PE SA are included. Furthemore, Rosequeens Properties Ltd and Aktua Hellas Holdings A.E are group of companies with subsidiaries the companies Rosequeens SRL and Aktua Greece Financial Solutions AE respectively. The aforementioned subsidiaries are not included in this note.
c. Associates
Name
Country
Group's ownership interest %
30.6.2016
31.12.2015
1. DEP Thessalias and Stereas Ellados
Greece
50.00
50.00
2. A.L.C. Novelle Investments Ltd
Cyprus
33.33
33.33
3. Banking Information Systems ..
Greece
23.77
23.77
4. Propindex ..D..
Greece
35.58
35.58
5. Olganos ..
Greece
30.44
30.44
It is noted that since 2015, the Bank following the related loans restructuring agreements with the companies, SELONDA A.E.G.E. and NIREUS A.E.G.E., owns 23.01% and 20.72% of their shares, respectively. The Bank intends to transfer these companies in the near future and as a result these companies were classified in assets held for sale at their fair value, which was determined in the amount of 1.
Subsidiaries are fully consolidated, while joint ventures and associates are accounted under the equity method, in accordance with IAS 28 "Investments in associates and joint ventures" and IFRS 11 "Joint Arrangements".
Consolidated financial statements do not include the Commercial Bank of London Ltd which is a dormant company and Smelter Medical Systems AE, Aris-Diomidis Emporiki SA, Metek SA, Flagbright Ltd which have been fully impaired and are in the process of liquidation. The Group hedges the foreign exchange risk arising from the net investment in subsidiaries through the use of derivatives in their functional currency.
20. Disclosures of Law 4261/5.5.2014
Article 81 of Law 4261/5.5.2014 incorporated into Greek legislation the Article 89 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013, according to which, it is adopted for the first time the obligation to disclose information on a consolidated basis by Member State and third country in which the Group has headquarters and specified as follows: name or names, nature of business, geographic location, turnover, results before tax, taxes on results, public subsidies received and number of full time employees.
The required information is listed below.
Greece
Turnover in Greece on 31.12.2015 amounted to 3,160,041, results before tax amounted to losses (1,806,082) taxes on results amounted to 796,415 and the number of employees was 10,395 for the following companies that included:
Banks
1. Alpha Bank A.E.
(Bank's branches in Bulgaria and United Kingdom
areincluded)Investment Banking
1. Alpha Finance A.E.P...
2. Alpha .. Investment Holdings
3. Alpha A.E. Ventures Capital Management -S
4. Emporiki Management ..
Financing Companies
1. Alpha Leasing A.E.
2. ABC Factors A.E.
3. Diners Club Greece ..P.P.
Asset Management
1. Alpha Asset Management ..D...
Insurance
1. Alpha Insurance Agents ..
2. Alphalife A.A.E.Z.
Real estate and hotels
1. Alpha Astika Akinita ..
2. Ioniki Hotel Enterprises ..
3. Oceanos .....
4. Emporiki Development and Real Estate
Management ..5. Alpha Investment Property Chalandriou ..
6. Alpha Investment Property Attikis ..
7. Alpha Investment Property Attikis II ..
8. Alpha Investment Property Amarousion ..
9. Alpha Investment Property Amarousion ..
10. Alpha Investment Property Eleonas ..
11. APE Fixed Assets ..
12. lpha Investment Property Neas Kifisias ..
13. lpha Investment Property Kalirois ..
14. lpha Investment Property Levadias ...
15. lpha Investment Property Kefalariou ..
16. Alpha Investment Property Neas Erythraias ..
17. Anaplasi Plagias ..
Special purpose and holding entities
1. Ionian Holdings ..
Other companies
1. Kafe Alpha A.E.
2. Alpha Supporting Services ..
3. Real Car Rental A.E.
4. Evisak ..
5. Alpha Bank Notification Services ..
Cyprus
Turnover in Cyprus on 31.12.2015 amounted to 279,640, results before tax amounted to losses (391,152), taxes on results amounted to (3,291), the number of employees was 874 and the following companies were included:
Banks
1. Alpha Bank Cyprus Ltd
2. Emporiki Bank Cyprus Ltd
Investment Banking
1. Emporiki Ventures Capital Developed Markets Ltd
2. Emporiki Ventures Capital Emerging Markets Ltd
Insurance
1. Alpha Insurance Ltd
Real estate and hotels
1. Stockfort Ltd
Special purpose and holding entities
1. Alpha Group Investments Ltd
2. Ionian Equity Participations Ltd
3. AGI-BRE Participations 1 Ltd
4. AGI-RRE Participations 1 Ltd
5. Alpha Group Ltd
6. AGI-RRE Athena Ltd
7. AGI-RRE Poseidon Ltd
8. AGI-RRE Hera Ltd
9. Umera Ltd
10. AGI-BRE Participations 2 Ltd
11. AGI-BRE Participations 3 Ltd
12. AGI-BRE Participations 4 Ltd
13. AGI-RRE Apollo Ltd
14. AGI-RRE Ares Ltd
15. AGI-RRE Venus Ltd
16. AGI-RRE Artemis Ltd
17. AGI-BRE Participations 5 Ltd
18. AGI-RRE Cleopatra Ltd
19. AGI-RRE Hermes Ltd
20. AGI-Cypre Arsinoe Ltd
21. AGI-SRE Ariadni Ltd
22. AGI-Cypre Alaminos Ltd
23. AGI-Cypre Tochni Ltd
24. AGI-Cypre Evagoras Ltd
25. AGI-Cypre Tersefanou Ltd
26. AGI-Cypre Mazotos Ltd
27. AGI-Cypre Ermis Ltd
Other companies
1. Alpha Trustees Ltd
2. Zerelda Ltd
United Kingdom
Turnover in United Kingdom on 31.12.2015 amounted to 106,336, results before tax amounted to gains 10,717, taxes on results amounted to (1,044), the number of employees was 44 and the following companies included were:
Banks
1. Alpha Bank London Ltd
Asset Management
1. ABL Independent Financial Advisers Ltd
Special purpose and holding entities
1. Alpha Credit Group Plc
2. Emporiki Group Finance Plc
3. Katanalotika Plc
4. Epihiro Plc
5. Irida Plc
6. Pisti 2010-1 Plc
7. Alpha Finance Shipping LTD
Other companies
1. Alpha Bank London Nominees Ltd
2. Flagbright Ltd
Bulgaria
Turnover in Bulgaria on 31.12.2015 amounted to 3,725, results before tax amounted to losses (4,327), taxes on results amounted to 51 and the following companies included:
Real estate and hotels
1. Alpha Real Estate Bulgaria E.O.O.D.
2. Chardash Trading E.O.O.D.
3. AGI-BRE Participations 1 E.O.O.D.
4. AGI-BRE Participations 2 E.O.O.D.
5. AGI-BRE Participations 2BG E.O.O.D.
6. AGI-BRE Participations 3 E.O.O.D.
7. AGI-BRE Participations 4 E.O.O.D.
8. HT-1 E.O.O.D
9. AGI-BRE Participations 5 E.O.O.D..
Jersey
Turnover in Jersey on 31.12.2015 amounted to 971 and the results before tax amounted to losses (63).
Special purpose and holding entities
1. Alpha Group Jersey Ltd
Serbia
Turnover in Serbia on 31.12.2015 amounted to 53,555, results before tax amounted to losses (7,647), tax on results amounted to (31), the number of employees was 921 and the following companies included were:
Banks
1. Alpha Bank Srbija A.D.
Real estate and hotels
1. Alpha Real Estate D.O.O. Beograd
Romania
Turnover in Romania on 31.12.2015 amounted to 146,005, results before tax amounted to losses (23,247), taxes on results amounted to (123), the number of employees was 1,882 and the following companies included were:
Banks
1. Alpha Bank Romania S.A.
Leasing companies
1. Alpha Leasing Romania IFN S.A.
Investment Banking
1. SSIF Alpha Finance Romania S.A.
Insurance
1. Alpha Insurance Brokers S.R.L.
Real estate and hotels
1. Alpha Astika Akinita Romania S.R.L.
2. AGI-RRE Participations 1 S.R.L.
3. Romfelt Real Estate S.A.
4. AGI-RRE Zeus S.R.L.
5. AGI-RRE Athena S.R.L.
6. AGI-RRE Poseidon S.R.L.
7. AGI-RRE Hera S.R.L.
8. AGI-RRE Venus S.R.L.
9. AGI-RRE Cleopatra S.R.L.
10. AGI-RRE Hermes S.R.L.
11. SC Cordia Residence S.R.L.
12. SC Carmel Residential S.R.L.
13. Asmita Gardens S.R.L.
14. Ashtrom Residents S.R.L.
15. Cubic Center Development S.A.
Albania
Turnover in Albania on 31.12.2015 amounted to 25,198, results before tax amounted to losses (1,831), tax on results amounted to 5 the number of employees was 425 and the following companies included were:
Banks
1. Alpha Bank Albania SH.A.
FYROM
Turnover in FYROM on 31.12.2015 amounted to 6,690, results before tax amounted to losses (3,101), tax on results amounted to 199, the number of employees was 238 and the following companies included were:
Banks
1. Alpha Bank AD Skopje
Real estate and hotels
1. Alpha Astika Akinita D.O.O.E.L. Skopje
Neither the Bank nor the Group companies have received any public subsidies. According to article 82 of Law 4261/5.5.2014 with which incorporated into Greek legislation the article 90 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 is established the requirement to disclose the total return on assets.
The overall performance of the assets of the Group for the year of 2015 amounted to (1.9)% (31.12.2014: (0.5)%).
21. Operating segments
(Amounts in million of Euro)
1.1 - 30.6.2016
Retail Banking
Corporate Banking
Asset Management/Insurance
Investment Banking/ Treasury
South-Eastern Europe
Other
Total
Net interest income
506.0
346.7
7.6
(40.5)
144.9
1.6
966.3
Net fee and commission income
54.1
67.0
16.6
4.6
15.8
0.7
158.8
Other income
3.3
5.8
(0.7)
18.6
27.1
32.3
86.4
Total income
563.4
419.5
23.5
(17.3)
187.8
34.6
1,211.5
Total expenses
(326.1)
(75.3)
(13.3)
(14.5)
(108.1)
(34.0)
(571.3)
Impairment losses
(166.0)
(356.8)
(82.0)
(604.8)
Provision for Voluntary Separation Scheme
(31.5)
(31.5)
Profit/(loss) before income tax
71.3
(12.6)
10.2
(31.8)
(33.8)
0.6
3.9
Income tax
(24.4)
Profit/(loss) after income tax from continuing operations
(20.5)
Profit/(loss) from discontinued operations
1.6
1.6
Profit/(loss) after income tax
(18.9)
Assets
25,209.5
15,594.2
484.5
11,910.6
9,377.8
4,795.3
67,371.9
Liabilities
22,218.1
4,971.7
1,408.7
23,727.0
5,969.9
154.7
58,450.1
(Amounts in million of Euro)
1.1 - 30.6.2015
Retail Banking
Corporate Banking
Asset Management/Insurance
Investment Banking/ Treasury
South-Eastern Europe
Other
Total
Net interest income
486.7
352.4
9.2
(48.4)
157.8
(0.8)
956.9
Net fee and commission income
54.5
65.3
27.4
(2.5)
15.9
0.6
161.2
Other income
2.8
6.9
0.1
42.4
(12.8)
23.6
63.0
Total income
544.0
424.6
36.7
(8.5)
160.9
23.4
1,181.1
Total expenses
(323.2)
(70.8)
(16.3)
(14.7)
(104.6)
(24.9)
(554.5)
Impairment losses
(1,067.5)
(897.1)
(134.2)
(2,098.8)
Profit/(loss) before income tax
(846.7)
(543.3)
20.4
(23.2)
(77.9)
(1.5)
(1,472.2)
Income tax
309.3
Profit/(loss) after income tax from continuing operations
(1,162.9)
Profit/(loss) from discontinued operations
(89.2)
(89.2)
Profit/(loss) after income tax
(1,252.1)
Assets 31.12.2015
25,189.1
16,711.1
483.5
11,943.3
9,808.8
5,161.8
69,297.5
Liabilities 31.12.2015
22,417.8
4,827.8
1,359.0
25,038.3
6,309.0
292.3
60,244.3
i. Retail Banking
Includes all individuals (retail banking customers), professionals, small and very small companies operating in Greece and abroad excluding countries in South Eastern Europe.
The Group, through its extended branch network, offers all types of deposit products (deposits/ savings accounts, working capital/ current accounts, investment facilities/ term deposits, Repos, Swaps), loan facilities (mortgages, consumer, corporate loans, letters of guarantee) and debit and credit cards of the above customers.
ii. Corporate Banking
Includes all medium-sized and large companies, corporations with international business activities, corporations managed by the Corporate Banking Division and shipping companies operating in Greece and abroad except from South Eastern European countries. The Group offers working capital facilities, corporate loans, and letters of guarantee for the abovementioned corporations. This sector also includes leasing products which are provided by the subsidiary company Alpha Leasing A.E. as well as factoring services which are provided by the subsidiary company ABC Factors A.E.
iii. Asset Management/Insurance
Consists of a wide range of asset management services offered through Group's private banking units and its subsidiary, Alpha Asset Management A.E.D.A.K. In addition, it includes income received from the sale of a wide range of insurance products to individuals and companies through either AXA Insurance, which is the corporate successor of the former subsidiary Alpha Insurance A.E. or through the subsidiary Alphalife A.A.E.Z.
iv. Investment Banking/Treasury
Includes stock exchange, advisory and brokerage services related to capital markets, and also investment banking facilities, which are offered either by the Bank or specialized subsidiaries (Alpha Finance A.E.P.E.Y., Alpha Ventures S.A.). It also includes the activities of the Dealing Room in the interbank market (FX Swaps, Bonds, Futures, IRS, Interbank placements - Loans etc.).
v. South-Eastern Europe
Consists of the Bank's branches and the Group's subsidiaries, which operate in South-Eastern Europe. It is noted that Bulgaria's Branch and Alpha Bank's subsidiary Alpha Bank AD Skopje, are not included anymore in the results of the continuing activities in this sector anymore. Their financial result is included in the category "Profit/Loss from discontinued operations".
vi. Other
This segment consists of the non-financial subsidiaries of the Group and Bank's income and expenses that are not related to its operating activity.
22. Exposure in credit risk from debt issued by the peripheral Eurozone countries
Due to the prolonged turmoil in the Eurozone countries, and the issues which the Greek economy faces, concerning the service of public debt, the Group monitors the credit risk from its exposure to the Greek State as well as the remaining peripheral Eurozone countries.
i. Exposure to the Greek State
The table below presents the Group's total exposure in Greek Government securities:
30.6.2016
31.12.2015
Portofolio
Nominal value
Carrying amount
Nominal value
Carrying amount
Available for sale
4,442,677
3,725,281
4,659,672
3,930,081
Trading
1,790
1,234
2,783
1,888
Total
4,444,467
3,726,515
4,662,455
3,931,969
All Greek Government securities are classified in Level 1 based on the quality of inputs used for the estimation of their fair value.
In addition the securities issued by the public entities on 30.6.2016 amounted to 162.7 million (31.12.2015: 162.1 million.).
The Group's exposure to Greek State credit risk from other financial instruments, excluding securities and loans and advances is depicted in the table below:
On balance sheet exposure
30.6.2016
31.12.2015
Carrying amount
Carrying amount
Derivative financial instruments - assets
420,151
362,700
Derivative financial instruments - liabilities
(164,984)
(271,711)
Derivative financial assets from public sector entities amounted to 6.5 million on 30.6.2016 (31.12.2015: 16.6 million liabilities).
ii. Exposure to other peripheral Eurozone countries debt
The Group holds in its available for sale portfolio, bonds and treasury bills of the Republic of Cyprus with a book value of 143.8 million (31.12.2015: 96.9 million)
Additionally, the Group holds in its available for sale portfolio, bonds issued by the Italian Republic with a book value of 10.1 million (31.12.2015: 6.9 million) and bonds issued by the Spanish Republic with a book value of 8.5 million (31.12.2015: 8 million).
As at 30.6.2016 the Group had no exposure to bonds issued by Portugal and Ireland.
23. Disclosures relevant to the fair value of financial instruments
Fair value of financial instruments measured at amortized cost
30.6.2016
31.12.2015
Fair value
Carrying amount
Fair value
Carrying amount
Financial Assets
Loans and advances to customers
45,381,923
45,495,962
46,107,498
46,186,116
Investments securities
- Held to maturity
40,433
44,746
78,934
79,709
- Loans and receivables
3,761,683
3,683,411
4,364,715
4,289,482
Financial Liabilities
Due to customers
31,642,427
31,667,039
31,422,161
31,434,266
Debt securities in issue (1)
296,341
305,144
365,018
376,129
The table above presents the fair value and the carrying amount of financial instruments which are measured at amortized cost.
The fair value of loans is estimated based on the interbank market yield curves by adding a liquidity premium and spread per loan category and business unit for the expected loss. The fair value of deposits is estimated based on the interbank market yield curves by deducting customer's spread depending on the type of deposit. In both of these cases, the future cash flows (floating rate) are calculated based on the implied forward rates until their maturity.
The fair value of held to maturity securities and debt securities in issue is calculated using market prices, as long as the market is active. In all other cases as well as for the loans and receivables portfolio the discounted cash flows method is used and all significant variables are based either on observable market data or on a combination of observable and unobservable market data.
The fair value of other financial assets and liabilities which are valued at amortized cost does not differ materially from the respective carrying amount.
Hierarchy of financial instruments measured at fair value
30.6.2016
Level 1
Level 2
Level 3
Total
Fair value
Derivative Financial Assets
4,620
827,635
6,911
839,166
Securities held for trading
- Bonds and Treasury bills
1,234
1,234
- Shares
1,356
1,356
Available for sale securities
- Bonds and treasury bills
4,776,664
701,015
17,003
5,494,682
- Shares
47,698
16,292
51,027
115,017
- Other variable yield securities
34,429
34,429
Derivative financial liabilities
5
1,657,823
1,570
1,659,398
Convertible bond
15,300
15,300
(1) Debt securities in issue do not include the convertible bond loan issued by the Bank in the context of the agreement with Credit Agricole S.A. regarding the acquisition of Emporiki Bank since this security is measured at fair value.
31.12.2015
Level 1
Level 2
Level 3
Total
Fair value
Derivative Financial Assets
6,665
782,820
3,530
793,015
Securities held for trading
- Bonds and Treasury bills
1,888
1,888
- Shares
891
891
Available for sale securities
- Bonds and treasury bills
4,927,352
625,704
19,460
5,572,516
- Shares
143,815
43,337
187,152
Other variable yield securities
34,816
34,816
Derivative financial liabilities
21
1,550,508
1,550,529
Convertible bond loan
24,600
24,600
The tables above present the fair value of financial instruments which are measured at fair value in hierarchy levels on inputs used for the fair value measurement. Securities traded in an active market and exchange-traded derivatives are classified as Level 1.
The available for sale securities whose fair value is calculated based on non-binding market prices provided by dealers-brokers or on the application of the income approach methodology using interest rates and credit spreads which are observable in the market, are classified as Level 2. Level 3 classifications include securities whose fair value is estimated using significant unobservable inputs.
The fair value of non listed shares, as well as shares not traded in an active market is determined based on the estimations made by the Group which relate to the future profitability of the issuer after taking into account the expected growth rate of its operations, as well as the weighted average rate of capital return which is used as a discount rate. Given that the above parameters are mainly non observable, the valuation of these shares is classified as Level 3. On 30.6.2016 the Group classified in the available for sale securities portfolio the preference shares of Visa Inc. which the Group received through the acquisition of Visa Europe by Visa Inc. (note 2). In order to determine their fair value the Group used the conversion rate into ordinary shares and the current stock price of the ordinary share by taking into consideration the sale restrictions. The abovementioned shares were classified as level 2 securities, as the non-observable inputs used are insignificant in the calculation of the final fair value.
For the valuation of over the counter derivatives income approach methodologies are used: discounted cash flow models, option-pricing models or other widely accepted valuation models. Valuations are checked on a daily basis with the respective prices of the counterparty banks in the context of the daily process of provision of collaterals and settlement of derivatives. If the non-observable inputs are significant, the fair value that arises is classified into Level 3 or otherwise in Level 2.
Finally, the valuation of the convertible bond loan was based on the estimated share price at the maturity date of the bond, as reflected in the Group's business plan, which is unobservable market parameter.
The Group recognizes the transfer between fair value hierarchy Levels at the end of each quarter.
Within the period, corporate bonds of 241.5 million were transferred from Level 2 to Level 1 due to the satisfaction of the criteria of active market. In addition, within the period, 237.4 million of Greek corporate bonds were transferred from Level 1 to Level 2, as the liquidity margin (bid-ask spread) moved above the limit set for the characterization of market as active.
The table below presents the valuation methods used for the measurement of Level 3 fair value:
30.6.2016
Total
Fair ValueFair Value
Valuation Method
Significant
non-observable inputsDerivative Financial Assets
6,911
6,689
Discounted cash flows with interest rates, taking into account the credit risk of the counterparty
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
222
Discounted cash flows with interest rates
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Available for sale bonds
17,003
17,003
Based on issuer price / Discounted cash flows estimating credit risk
Issuer's price / Credit spread
Available for sale shares
51,027
51,027
Discounted cash flows / Multiples valuation method / Net assets method / Cost of acquisition
Future profitability of the issuer
Derivative Financial Liabilities
1,570
1,570
Discounted cash flows with interest rates taking into account the credit risk
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
Convertible bond
15,300
15,300
Discounted cash flows / Multiples valuation method
Future profitability of the issuer
31.12.2015
Total
Fair ValueFair Value
Valuation Method
Significant
non-observable inputsDerivative Financial Assets
3,530
3,185
Discounted cash flows with interest rates, taking into account the credit risk of the counterparty
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
345
Discounted cash flows with interest rates
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Available for sale bonds
19,460
19,460
Based on issuer price
Price
Available for sale shares
43,337
43,337
Discounted cash flows / Multiples valuation method / Cost of acquisition
Future profitability of the issuer
Convertible bond
24,600
24,600
Discounted cash flows / Multiples valuation method
Future profitability of the issuer
A reconciliation of the movement of financial instruments measured at fair value in Level 3 is depicted below.
30.6.2016
Assets
Liabilities
Available for sale securities
Derivative Financial Assets
Derivative Financial Liabilities
Convertible Bond Loan
Opening balance 1.1.2016
62,797
3,530
(24,600)
Total gain or loss recognized in the income statement
(706)
(113)
9,300
Total gain or loss recognized directly in equity
1,962
Purchases/issues
420
Sales/repayments/settlements
(1,281)
(177)
Transfers to Level 3 from Level 1
4,838
Transfers to Level 3 from Level 2
3,671
(1,570)
Balance 30.6.2016
63,080
6,911
(1,570)
(15,300)
Amounts included in the income statement and relate to financial instruments included in the balance sheet at the end of the reporting period
(579)
(113)
9,300
Within the period 4.8 million of shares were transferred from Level 1 to Level 3 as for their value non observable data is used. Also 3.7 million of derivative financial Assets and 1.6 million of derivative financial Liabilities were transferred from Level 2 to Level 3, since the use of non-observable inputs was significant.
31.12.2015
Assets
Liabilities
Available for sale securities
Derivative Financial Assets
Derivative Financial Liabilities
Convertible Bond Loan
Opening balance 1.1.2015
76,453
(5,393)
Changes for the period 1.1 - 30.6.2015
Total gain or loss recognized in the income statement
(756)
798
5,373
Total gain or loss recognized directly in equity
(1,215)
Purchases/Issues
7,754
Sales/Repayments/Settlements
(6,838)
20
Transfers to Level 3 from Level 2
3,034
Balance 30.6.2015
75,398
3,832
-
Changes for the period 1.7 - 31.12.2015
Total gain or loss recognized in the income statement
(9,010)
2,566
Total gain or loss recognized directly in equity
(1,468)
(798)
Purchases/Issues
6,601
Sales/Repayments/Settlements
(8,735)
Transfers to Level 3 from Level 2
11
(2,070)
(24,600)
Balance 31.12.2015
62,797
3,530
-
(24,600)
Amounts included in the income statement and relate to financial instruments included in the balance sheet at the end of the reporting period 1.1 - 30.6.2015.
(1,364)
(1,221)
During 2015, corporate bonds amounting to 11.3 million as well as other securities amounting to 3 million that were classified in Level 3 were purchased, since non observable parameters were used for valuation purposes. In addition, sales-repayments of foreign corporate bonds amounting to 6.4 million and other securities amounting 9.2 million took place. Regarding derivative financial assets, a transfer from Level 2 to Level 3 occurred since the use of non-observable inputs was significant. Finally within 2015 the convertible bond loan was transferred from Level 2 to Level 3 as a different valuation method was applied.
Sensitivity analysis for Level 3 financial instruments that its valuation was based on non observable data is presented in the following table:
Significant
non-observable inputsSignificant
non-observable
inputs ChangeTotal effect in income statement
Total effect
in Equity
Favourable Variation
Unfavourable Variation
Favourable Variation
Unfavourable Variation
Derivative Financial Assets
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
Increase the probability of default through reduction of internal ratings by 2 grades / Increase the loss given default by 10%
(752)
(752)
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Increase the probability of dividend payments to 100%
(222)
(222)
Available for sale bonds
Issuer Price / Credit spread
Variation +/- 10%
857
(834)
Available for sale shares
Future profitability of the Issuer
Variation +/- 10% in P/B and EV/Sales ratios (multiples valuation method)
(163)
1,456
(1,456)
Derivative Financial Liabilities
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
The BCVA adjustment is calculated on the net exposure per counterparty and is allocated to derivative financial assets
Convertible bond Loan
Future profitability of the Issuer
Alpha Bank share price in the range of 1.5-2.5
5,073
(1,745)
5,073
(1,745)
Total
5,073
(2,882)
7,386
(5,009)
24. Capital adequacy
The Group's policy is to maintain a robust capital base to safeguard the Bank's development and retain the trust of depositors, shareholders, markets and business partners.
Share capital increases are performed after Shareholders' General Meeting or Board of Directors' decisions in accordance with the articles of association or the relevant laws.
Treasury shares are allowed to be purchased based on the terms and conditions of law.
The capital adequacy is supervised by Single Supervising Mechanism of ECB, to which reports are submitted on quarterly basis. The minimum requirements regarding Tier I ratio and the capital adequacy ratio of the Bank are stipulated by Bank of Greece Governor's Acts.
The capital adequacy ratio compares regulatory capital with the risks assumed by the Bank (risk-weighted assets). Regulatory capital includes Tier I capital (share capital, reserves and non-controlling interests), additional Tier I capital (hybrid securities) and Tier II capital (subordinated debt). Risk-weighted assets include the credit risk of the investment portfolio, the market risk of the trading portfolio and operational risk.
Since January 1, 2014 EU Directive 2013/36/EU dated 26 June 2013 incorporated in Greek Law through the Law 4261/2014 along with the EU Regulation 575/2013/EU, dated 26 June 2013 "CRD IV" came into force, along which gradually introduce the new capital adequacy framework (Basel III) for credit institutions.
According to the above regulatory framework, for the calculation of capital adequacy ratio the effective transitional arrangements are followed.
Moreover:
besides the 8% Capital Adequacy limit, there are limits of 4.5% for Common Equity ratio and 6% for Tier I ratio, and
is required the maintenance of capital buffers additional to the Common Equity Capital, from 1.1.2016 and gradually until 31.12.2019.
In particular:
from 1.1.2016 a capital buffer of 0.625% exists which will gradually rise to 2.5% on 31.12.2019.
The Bank of Greece through the acts issued by the Executive Committee settled the following capital buffers:
- Countercyclical capital buffer rate for the first nine months of 2016, "zero percent" (Act 55/18.12.2015, 83/18.3.2016 & 97/16.6.2016)
- Other systemically important institutions (O-SII) buffer for 2016 "zero percent" (Act 56/18.12.2015)
These limits should be met both on a standalone and on a consolidated basis.
30.6.2016 (estimated)
31.12.2015* (restated)
31.12.2015 (published)
Common Equity Tier I
16.7%
16.6%
16.7%
Tier I
16.7%
16.6%
16.7%
Capital adequacy ratio
16.7%
16.8%
16.8%
* The change of 10 basis points in 31.12.2015 capital adequacy ratio is due to the final calculation of the credit risk weighted assets which became final after the publication of the 2015 Annual Financial Report.
25. Related - party transactions
The Bank and the Group companies enter into a number of transactions with related parties in the normal course of business. These transactions are performed at arms length and are approved by the Bank's committees.
a. The outstanding balances of the Group's transactions with key management personnel consisting of members of the Bank's Board of Directors and Executive Committee, their close family members and the entities controlled by them, as well as, the results related to these transactions are as follows:
30.6.2016
31.12.2015
Assets
Loans and advances to customers
10,001
11,460
LIabilities
Due to customers
26,780
26,200
Employee defined benefit obligations
221
453
Total
27,001
26,653
Letters of guarantee and approved limits
10,931
11,689
From 1 January
30.6.2016
30.6.2015
Income
Interest and similar income
50
171
Fee and commission income
68
69
Total
118
240
Expenses
Interest expense and similar charges
31
137
Fees paid to key management and close family members
1,753
1,691
Total
1,784
1,828
b. The outstanding balances with the Bank's subsidiaries, joint ventures and associates as well as the results related to these transactions are as follows:
30.6.2016
31.12.2015
Assets
Loans and advances to customers
157,886
161,890
Derivative financial assets
303
527
Total
158,189
162,417
Liabilities
Due to customers
21,511
21,494
From 1 January to
30.6.2016
30.6.2015
Income
Interest and similar income
2,856
2,851
Fee and commission income
1
2
Other income
111
409
Total
2,968
3,262
Expenses
Interest expense and similar charges
86
152
Other expenses
1,047
1,106
Total
1,133
1,258
c. The Employees Supplementary Fund maintains deposits with the Bank amounting to 2,345 (31.12.2015: 4,590). Periods' interest expenses relating to deposits amount to 16. Also the Supplementary Fund's assets include Alpha Bank's shares of 114 (31.12.2015: 114).
d. The Hellenic Financial Stability Fund (HFSF) exercises significant influence on the Bank. In particular, according to Law 3864/2010 and the Relationship Framework Agreement("RFA") as of 23.11.2015, which replaced the previous of 2013, HFSF has representation in the Board of Directors and in other significant Committees of the Bank. Therefore, according to IAS 24, HFSF and its related entities are considered related parties for the Bank.
The outstanding balances and the results related to these transactions are presented as follows:
From 1 January to
30.6.2016
30.6.2015
Income
Fee and commission income
5
34
26. ssets held for sale and discontinued operations
The Bank, under the approved by the European Committee Restructuring Plan (note 42 of the consolidated financial statements as of 31.12.2015) and the fulfillment of the relevant commitment relating to the deleveraging of part of the assets of its international activities, proceeded to the sale of the operations of the Bulgaria Branch and Alpha Bank AD Skopje as well as it began the process for the sale of APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE.
Bank's branch in Bulgaria
On 17.7.2015, the Bank and Eurobank, issued a joint statement announcing their agreement, in main terms, for the transfer of operations of the Bulgaria branch to Eurobank's subsidiary in Bulgaria (PostBank). On 6.11.2015 the Bank and Postbank signed the relevant contract, finalizing the terms of the transfer which include a transfer price of 1 Euro and a partial undertaking of Branch's debt obligations by the buyer. The transfer was completed on 1.3.2016.
From 30.6.2015 the assets of Bulgaria Branch, and its directly related liabilities, met the qualification requirements as "Held for sale" in accordance with IFRS 5, as at that date the management had decided to sell the unit and was already in the process of negotiations with the prospective buyer. In addition, Bulgaria Branch is considered a separate geographical area of operations for the Group which is included in the Southeast Europe for information purposes per operating segment. After the classification of the Bulgaria Branch, which is the only company in the banking sector whereby the Group operates in Bulgaria, as asset held for sale, its activities are classified as "discontinued operations" by the Group.
Therefore, during 2015, for the purpose of preparation of the Group's interim financial statements, the Group valued the assets and liabilities of Bulgaria Branch at the lowest price between the book value and fair value less selling costs recognizing the difference which was amounted to 89,007 as a loss in "Profit/(loss) after tax income from discontinued operations" in the Income Statement. After the above valuation, the assets of the Branch as at 31.12.2015 amount to 387,947 and the liabilities of Bulgaria Branch amount to 277,675.
Income Statement and Statement of Comprehensive Income
The results and cash flows arising from Bulgaria Branch are presented as "discontinued operations" in the Income Statement with a corresponding restatement of comparative period 1.1.2015 to 30.6.2015 and 1.4.2015 to 30.6.2015 and the Statement of Cash Flows, with a corresponding restatement of the comparative period 1.1.2015 to 30.06.2015.
(Amounts in thousands of Euro)
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Interest and similar income
3,123
13,003
6,383
Interest expense and similar charges
(556)
(2,770)
(1,746)
Net interest income
2,567
10,233
4,637
Fee and commission income
842
3,276
1,597
Commission expense
(74)
(200)
(103)
Net fee and commission income
768
3,076
1,494
Dividend income
Gains less losses on financial transactions
64
277
116
Other income
79
188
55
Total income
3,478
13,774
-
6,302
Staff costs
(1,575)
(5,055)
(2,596)
General administrative expenses
(2,042)
(7,958)
(4,149)
Depreciation
(397)
(1,474)
(723)
Other expenses
(30)
(18)
8
Total expenses
(4,044)
(14,505)
-
(7,460)
Impairment losses and provisions to cover credit risk
1,563
(2,464)
(2,361)
Profit/(loss) before income tax
997
(3,195)
-
(3,519)
Income tax
Profit/(loss), after income tax
997
(3,195)
-
(3,519)
Difference due to valuation at fair value
(85,500)
(85,500)
Loss from the disposal after income tax
(188)
102
Net profit/(loss) after income tax from discontinued operations
809
(88,695)
102
(89,019)
The amount of cash and cash equivalent of the Bulgaria Branch, which was transferred at the disposal, amounted to 9,942.
Alpha Bank AD Skopje
The Bank, during the fourth quarter of 2015, began the process of selling its subsidiary Alpha Bank Skopje (ABS). ABS is the smallest subsidiary of the Group in the Balkans and it has a small presence in the local market in Skopje (market share <2%). As part of this process, investors, which were shortlisted from a broader investor list, were invited to submit their bids for the acquisition of the 100% of the ABS shares and of the 100% of the hybrid instrument (subordinated loan) granted to the ABS by the parent company (both of them consist the "Perimeter Transaction"). The disposal was completed on 10.5.2016 for a total amount of 3.2 million.
On 31.12.2015 the Bank's participation in the subsidiary and the hybrid instrument satisfy the conditions for classification as "held for sale" in accordance with IFRS 5, while its operations, which represent a distinct geographical area of operations for the Group that is part of the South-Eastern Europe sector for reporting purposes per operational segment, have been characterized as "Discontinued operations".
Therefore, for the preparation of 31.12.2015 consolidated financial statements the participation in the subsidiary company and the hybrid instrument was valued at the lower of book and fair value less cost of sale, recognizing the difference amounted to 14,414 as a loss in the income statement in caption "Net profit/(loss) after income tax from discontinued operations". The fair value was determined based on the financial bids which were received from the potential investors for the Perimeter of the Transaction and the assessment of the Bank. After the above valuation, the assets of the Alpha Bank AD Skopje on 31.12.2015 amounted to 84,470 and its liabilities to 80,714.
Income Statement and Statement of Comprehensive Income
The results and cash flows arising from Alpha Bank AD Skopje are presented as "discontinued operations" in the Income Statement and the Statement of Comprehensive Income with a corresponding restatement of comparative period 1.1.2015 to 30.6.2015 and 1.4.2015 to 30.6.2015 and the Statement of Cash Flows, with a corresponding restatement of the comparative period 1.1.2015 to 30.6.2015.
The following table analyzes the amounts presented in the Statement of Comprehensive Income.
(Amounts in thousands of Euro)
From 1 January to
From 1 April to
30.6.2016
30.6.2015
30.6.2016
30.6.2015
Interest and similar income
1,525
2,384
429
1,128
Interest expense and similar charges
(382)
(530)
(86)
(241)
Net interest income
1,143
1,854
343
887
Fee and commission income
404
557
121
291
Commission expense
(183)
(270)
(55)
(141)
Net fee and commission income
221
287
66
150
Dividend income
15
15
Gains less losses on financial transactions
132
291
68
172
Other income
40
48
16
25
Total income
1,536
2,495
493
1,249
Staff costs
(907)
(1,370)
(226)
(690)
General administrative expenses
(691)
(1,157)
(216)
(651)
Depreciation
(134)
(209)
(33)
(103)
Other expenses
(80)
(160)
(28)
(13)
Total expenses
(1,812)
(2,896)
(503)
(1,457)
Impairment losses and provisions to cover credit risk
(482)
(183)
39
(168)
Profit/(Loss) before income tax
(758)
(584)
29
(376)
Income tax
21
71
42
Profit/(loss), after income tax
(737)
(513)
29
(334)
Gain from the disposal after income tax
1,535
1,535
Profit /(losses) after income tax, from discontinued operations
798
(513)
1,564
(334)
Exchange differences on translating and hedging the net investment in foreign operations
(40)
39
7
(10)
Amounts that may be reclassified in the Income Statement from discontinued operations
(40)
39
7
(10)
Total comprehensive income for the period after income tax
758
(474)
1,571
(344)
The amount of cash and cash equivalent of Alpha Bank Skopje, which was transferred at the disposal, amounted to 10,973.
Ioniki Hotel Enterprises
The Group, on 17.2.2016, announced its intention to sell Ioniki Hotel Enterprises through an Invitation for Expressions of Interest. As a result, from 31.12.2015 the assets of the company and the related liabilities meet the criteria to be classified as 'held for sale' in accordance with IFRS 5. Under IFRS 5, the Group proceeded with an estimation of the fair value of the assets and liabilities of Ioniki Hotel Enterprises AE. Assets of Ioniki Hotel Enterprises AE as at 30.6.2016 amount to 187,191 (31.12.2015: 185,701) while its liabilities amount to 8,984 (31.12.2015: 8,392).
Taking into account that the company is not a separate major line of business for the Group, the criteria to be characterized as 'discontinued operations' are not met. The company is included in "Other" in operating segment analysis.
The table below analyzes the assets and the liabilities of Ioniki Hotel Enterprises AE, after intercompany eliminations.
(Amounts in thousands of Euro)
30.6.2016
31.12.2015
ASSETS
Cash and balances with Central Banks
74
85
Due from banks
5
112
Loans and advances to customers
2,000
1,122
Property, plant and equipment
169,555
168,777
Goodwill and other intangible assets
288
302
Deferred tax assets
13,877
13,692
Other assets
1,392
1,611
187,191
185,701
Valuation at fair value
(36,389)
Assets held for sale
150,802
185,701
LIABILITIES
Liabilities of current income tax and other taxes
483
314
Defined benefit obligations
2,348
2,294
Other liabilities
6,099
5,730
Provisions
54
54
Total liabilities related to assets held for sale
8,984
8,392
APE Fixed Assets , APE Commercial Property , APE Investment Property AE
Sale consultants were engaged in June of the current year and the liquidation procedure of the Bank's participations in APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE began. APE Fixed Assets AE is a Bank's subsidiary, while APE Commercial Property AE and APE Investment Property AE are joint ventures, where the control is exercised jointly by the Bank and the other shareholder.
From 30.6.2016 the abovementioned investments meet the requirements to be classified as "Held for sale" in accordance with IFRS 5, as well as on that date the Management had decided their sale, had initiated an active programme to find buyer and the sale is expected to be completed within one year.
According to IFRS 5 the assets held for sale or disposal groups are valued at the lower of book and fair value less cost of sale and they are presented in the Balance Sheet separately from other assets and liabilities. As regards the subsidiary APE Fixed Assets AE the Group proceeded to the measurement of the fair value of the assets and liabilities which consolidates, while as regards the joint ventures APE Commercial Property AE and APE Investment Property AE which are consolidated with the equity method the Group measured the fair value of its participation and of loans and receivables which constitute part of the net investment in them. From the abovementioned measurement on 30.6.2016 losses amounting to 1.7 million arose which were recognized in caption "Gains less losses on financial transactions" in the Income Statement.
Taking into account that the companies are not a separate major line of business for the Group, the criteria to be characterized as 'discontinued operations' are not met. The company is included in "Other" in operating segment analysis.
In the table below an analysis of the specific assets regarding APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE which are presented in the Balance Sheet as assets held for sale is depicted.
(Amounts in thousands of Euro)
30.6.2016
ASSETS
Investment property
39,872
Loans and advances to customers
47,570
Investments in associates and joint ventures
39,244
Other assets
2
Other assets held for sale
126,688
LIABILITIES
Liabilities of current income tax and other taxes
30
Defined benefit obligations
301
Other liabilities
7
Total liabilities related to assets held for sale
338
Amounts recognized directly in equity for held for sale items
(122)
Non-controlling interests for held for sale items
10,992
Other asset held for sale
Assets held for sale include also other fixed assets held for sale of the Group of an amount of 4.9 million (31.12.2015: 4.9 million) thereby total amount of Assets held for sale of the Group as at 30.6.2016 amounts to 282,429 (31.12.2015: 663,063). In addition, the Bank's participations to the companies "SELONDA A.E.G.E." and "NIREUS A.E.G.E." have been classified to Assets held for sale, since it intends to transfer these companies in the near future at their fair value, which was determined in the amount of 1.
The Group, at each reporting date, assesses the actions taken within the context of the implementation of the restructuring plan in order assets and liabilities that are directly associated with them to be classified as held for sale when the criteria of IFRS 5 (which are presented in note 1.17 of the 31.12.2015 consolidated financial statements) are met.
27. Corporate events
a. On 26.1.2016 the Bank participated in the establishment of Aktua Hellas Holding SA, which is based in Greece with a participation of 45% and share capital of 25 thousand.
b. On 2.2.2016 the Bank participated in the share capital increase of the joint venture Alpha TANEO AKES with an amount of 51 thousand.
c. On 18.2.2016 the Bank participated in the share capital increase of its subsidiary, Alpha Group Investments Ltd with the amount of 57.82 million.
d. On 19.2.2016 the subsidiary of the Bank, Alpha Group Investments Ltd, participated in the share capital increase of Group subsidiaries, AEP Amarousioun I, AEP Amarousion II, AEP Chalandriou, AEP Neas Kifisias and AEP Kallirois for 19.99 million, 13.19 million, 22.64 million, 1 million and 1 million, respectively.
e. On 24.2.2016 the joint venture Aktua Hellas Holding S.A., established the company Aktua Greece Financial Solutions S.A with a share capital of 100 thousand.
f. On 1.3.2016 the transfer of Alpha Bank Bulgaria Branch operations in Eurobank Bulgaria AD, a subsidiary of Eurobank Ergasias AE was completed.
g. On 22.4.2016 the Bank participated in the share capital increase of the joint venture Aktua Hellas Holding S.A., with the amount of 45 thousand.
h. On 4.5.2016 the subsidiary of the Group., Alpha Group Investments Ltd, founded the company AGI SRE Participations 1 Ltd, based in Cyprus for an amount of 1 thousand.
i. On 10.5.2016 the sale of all shares of the Bank's subsidiary, Alpha Bank A.D. Skopje was completed.
j. On 13.5.2016 the Bank participated in the share capital increase of its subsidiary, Alpha Group Investments Ltd with the amount of 11.9 million.
k. On 17.5.2016 Alpha Bank, Eurobank and KKR Credit reached an agreement to assign the management of credit and equity exposures to a selected number of Greek companies into a platform managed by Pillarstone.
l. On 23.5.2016 the subsidiary of the Group AGI-RRE Participations 1 Ltd participated in the share capital increase of Group subsidiary Asmita Gardens Srl by contributing 2 million.
m. On 8.6.2016 the subsidiary of the Group AGI-SRE Participations 1 Ltd, founded the company AGI-SRE Participations 1 DOO, based in Serbia, for an amount of 1.
28. Restatement of financial statements
During the current period the Group modified the way of presentation of figures related to the loyalty Bonus card program. These figures, which up to now were included in other expenses, other income and commissions are now included as a net amount in commission income. This modification is performed in order to reflect better the substance of the reward program. As a result of this change, some figures of the income statement of the comparative period reformed without changing the result, as presented in the following table:
From 1 January to
31.12.2015
30.9.2015
30.6.2015
31.3.2015
Net fee and commission income
(535)
(1,046)
(1,421)
(856)
Other income
(3,523)
(1,838)
(873)
(490)
General administrative expenses
4,058
2,884
2,294
1,346
Total effect
-
-
-
-
1.10 - 31.12.2015
1.7 - 30.9.2015
1.4 - 30.6.2015
1.1 - 31.3.2015
Net fee and commission income
511
375
(565)
(856)
Other income
(1,685)
(965)
(383)
(490)
General administrative expenses
1,174
590
948
1,346
Total effect
-
-
-
-
Moreover the figures of the comparative periods have been restated due to the finalization of the Bulgaria Branch transfer terms and the presentation of Alpha Bank Skopje as a discontinued operation (note 26).
Below are restated statements of income and cash flows for the period 1.1 - 30.6.2015 based on these modifications.
Consolidated Income Statement
(Amounts in thousands of Euro)
From 1 January to 30.6.2015
Published amounts
Restatements due to changes in the presentation of figures relating to the loyalty Bonus card program
Restatements due to finalization of the Bulgaria Branch
transfer terms
Restatements due to presentation of Alpha Bank Skopje as discontinued operation
Restated
amountsInterest and similar income
1,525,180
1,643
(2,384)
1,524,439
Interest expense and similar charges
(568,075)
530
(567,545)
Net interest income
957,105
1,643
(1,854)
956,894
Fee and commission income
195,868
(800)
(557)
194,511
Commission expense
(32,996)
(621)
270
(33,347)
Net fee and commission income
162,872
(1,421)
(287)
161,164
Dividend income
560
(15)
545
Gains less losses on financial transactions
36,253
(291)
35,962
Other income
31,497
(873)
(48)
30,576
68,310
(873)
(354)
67,083
Total income
1,188,287
(2,294)
1,643
(2,495)
1,185,141
Staff costs
(264,841)
1,370
(263,471)
General administrative expenses
(240,780)
2,294
1,157
(237,329)
Depreciation and amortization
(51,746)
209
(51,537)
Other expenses
(2,368)
160
(2,208)
Total expenses
(559,735)
2,294
2,896
(554,545)
Impairment losses and provisions to cover credit risk
(2,097,187)
(1,838)
183
(2,098,842)
Share of profit/(loss) of associates and joint ventures
(3,987)
(3,987)
Profit/(loss) before income tax
(1,472,622)
-
(195)
584
(1,472,233)
Income tax
309,429
(71)
309,358
Net profit/(loss) after income tax
(1,163,193)
-
(195)
513
(1,162,875)
Net profit/(loss) after income tax from discontinued operations
(88,890)
195
(513)
(89,208)
Net profit/(loss) after income tax
(1,252,083)
-
-
-
(1,252,083)
Profit/(loss) attributable to:
Equity owners of the Bank
- from continuing operations
(1,163,360)
(195)
513
(1,163,042)
- from discontinued operations
(88,890)
195
(513)
(89,208)
(1,252,250)
-
-
-
(1,252,250)
Non-controlling interests
167
167
Earnings/(losses) per share:
Basic and diluted (per share)
(0.10)
(4.90)
(Amounts in thousands of Euro)
From 1 April to 30.6.2015
Published amounts
Restatements due to changes in the presentation of figures relating to the loyalty Bonus card program
Restatements due to finalization of the Bulgaria Branch
transfer terms
Restatements due to presentation of Alpha Bank Skopje as discontinued operation
Restated
amountsInterest and similar income
763,610
905
(1,128)
763,387
Interest expense and similar charges
(281,700)
241
(281,459)
Net interest income
481,910
905
(887)
481,928
Fee and commission income
96,941
(270)
(291)
96,380
Commission expense
(18,830)
(295)
141
(18,984)
Net fee and commission income
78,111
(565)
(150)
77,396
Dividend income
535
(15)
520
Gains less losses on financial transactions
10,177
(172)
10,005
Other income
17,364
(383)
23
(25)
16,979
28,076
(383)
23
(212)
27,504
Total income
588,097
(948)
928
(1,249)
586,828
Staff costs
(130,578)
690
(129,888)
General administrative expenses
(122,085)
948
651
(120,486)
Depreciation
(26,024)
103
(25,921)
Other expenses
(1,302)
(22)
13
(1,311)
Total expenses
(279,989)
948
(22)
1,457
(277,606)
Impairment losses and provisions to cover credit risk
(1,672,282)
(582)
168
(1,672,696)
Share of profit/(loss) of associates and joint ventures
(1,997)
(1,997)
Profit/(loss) before income tax
(1,366,171)
-
324
376
(1,365,471)
Income tax
318,621
(42)
318,579
Net profit/(loss) after income tax
(1,047,550)
-
324
334
(1,046,892)
Net profit/(loss) after income tax from discontinued operations
(88,695)
(324)
(334)
(89,353)
Net profit/(loss) after income tax
(1,136,245)
-
-
-
(1,136,245)
Profit/(loss) attributable to:
Equity owners of the Bank
- from continuing operations
(1,047,581)
324
334
(1,046,923)
- from discontinued operations
(88,695)
(324)
(334)
(89,353)
(1,136,276)
-
-
-
(1,136,276)
Non-controlling interests
31
31
Earnings/(losses) per share:
Basic and diluted (per share)
(0.09)
(4.45)
Consolidated Statement of Cash Flows
(Amounts in thousands of Euro)
From 1 January to 30.6.2015
Published amounts
Finalization of Alpha Bank Bulgaria
transfer terms
Restatements due to presentation of Alpha Bank Skopje as discontinued operation
Restated amounts from discontinued operations
Cash flows from continuing operating activities
Profit / (loss) before income tax
(1,472,622)
(195)
584
(1,472,233)
Adjustments for gain/(losses) before income tax for:
Depreciation/Impairment of fixed assets
29,236
(122)
29,114
Amortization/Impairment of intangible assets
22,510
(87)
22,423
Impairment losses from loans, provisions and staff leaving indemnity
2,141,155
(338)
2,140,817
(Gains)/losses from investing activities
34,524
34,524
(Gains)/losses from financing activities
54,269
54,269
(Gains)/losses ratio from associates and joint ventures
3,987
3,987
813,059
(195)
37
812,901
Net (increase)/decrease in assets relating to continuing operating activities:
Due from banks
870,781
(3,668)
867,113
Trading securities and derivative financial assets
217,710
217,710
Loans and advances to customers
(848,257)
195
(1,702)
(849,764)
Other assets
(90,138)
30
(90,108)
Net increase/(decrease) in liabilities relating to continuing operating activities:
Due to banks
11,092,319
20
11,092,339
Derivative financial liabilities
(58,901)
(58,901)
Due to customers
(11,644,659)
11,673
(11,632,986)
Other liabilities
(67,871)
182
(67,689)
Net cash flows from continuing operating activities before taxes
284,043
-
6,572
290,615
Income taxes and other taxes paid
(30,601)
(30,601)
Net cash flows from continuing operating activities
253,442
-
6,572
260,014
Net cash flows from discontinued operating activities
17,123
(6,572)
10,551
Cash flows from continuing investing activities
Investments in subsidiaries and associates
(344)
(344)
Acquisitions during the period
9,151
9,151
Income from subsidiary disposal
15,392
15,392
Dividends received
560
560
Purchases of fixed and intangible assets
(42,738)
46
(42,692)
Disposals of fixed and intangible assets
6,318
6,318
Net (increase)/decrease in investement securities
(248,452)
(6,801)
(255,253)
Net cash flows from continuing investing activities
(260,113)
-
(6,755)
(266,868)
Net cash flows from discontinued investing activities
178
6,755
6,933
Cash flows from continuing financing activities
-
Repayments of debt securities in issue and other borrowed funds
(89,451)
(89,451)
(Purchases)/sales of hybrid securities
(467)
(467)
Net cash flows from continuing financing activities
(89,918)
-
-
(89,918)
Effect of exchange rate differences on cash and cash equivalents
1,843
1,843
Net increase/(decrease) in cash flows - continuing activities
(94,746)
-
(183)
(94,929)
Net increase/(decrease) in cash flows - discontinued activities
17,301
183
17,484
Cash and cash equivalents at the beginning of the period
1,194,244
1,194,244
Cash and cash equivalents at the end of the period
1,116,799
1,116,799
During the current period the Group completed the valuation of the net assets of Asmita Gardens SRL, which the Group acquired in the second quarter of 2015. The adjustments to the temporary fair values were recognized retrospectively as if the accounting treatment of the acquisition had been completed at the acquisition date. Therefore on 31.12.2015 the figures of the Balance Sheet were modified as depicted below:
Interim Consolidated Balance Sheet
(Amounts in thousands of Euro)
31.12.2015
Published amounts
Finalization of the accounting treatment of Asmita Gardens SLR
Restated
amountsASSETS
Cash and balances with Central Banks
1,730,327
1,730,327
Due from banks
1,976,273
1,976,273
Trading securities
2,779
2,779
Derivative financial assets
793,015
793,015
Loans and advances to customers
46,186,116
46,186,116
Investment securities
- Available for sale
5,794,484
5,794,484
- Held to maturity
79,709
79,709
- Loans and receivables
4,289,482
4,289,482
Investments in associates and joint ventures
45,771
45,771
Investment property
623,662
623,662
Property, plant and equipment
860,901
860,901
Goodwill and other intangible assets
342,251
2,900
345,151
Deferred tax assets
4,398,176
4,398,176
Other assets
1,510,225
(1,592)
1,508,633
68,633,171
1,308
68,634,479
Assets held for sale
663,063
663,063
Total Assets
69,296,234
1,308
69,297,542
LIABILITIES
Due to banks
25,115,363
25,115,363
Derivative financial liabilities
1,550,529
1,550,529
Due to customers (including debt securities in issue)
31,434,266
31,434,266
Debt securities in issue and other borrowed funds
400,729
400,729
Liabilities of current income tax and other taxes
38,192
38,192
Deferred tax liabilities
20,852
20,852
Employee defined benefit obligations
108,550
108,550
Other liabilities
910,622
1
910,623
Provisions
296,014
2,444
298,458
59,875,117
2,445
59,877,562
Liabilities related to assets held for sale
366,781
366,781
Total Liabilities
60,241,898
2,445
60,244,343
EQUITY
Equity attributable to equity owners of the Bank
Share capital
461,064
461,064
Share premium
10,790,870
10,790,870
Reserves
301,223
(1,137)
300,086
Amounts recognized directly in equity for held for sale items
8,834
8,834
Retained earnings
(2,546,885)
(2,546,885)
9,015,106
(1,137)
9,013,969
Non-controlling interests
23,998
23,998
Hybrid securities
15,232
15,232
Total Equity
9,054,336
(1,137)
9,053,199
Total Liabilities and Equity
69,296,234
1,308
69,297,542
29. Events after the balance sheet date
a. On 14.7.2016 the Bank, as a result of relative restructuring agreement of the company Dias Aquaculture ABEE, acquired additional shares of Selonda Aquacultures AEGE, from the share capital increase, conducted by contribution in kind of all the assets and part of the liabilities of company Dias Aquaculture SA to the company Selonda Aquacultures AEGE. Therefore, the Bank's share in the latter changed from 23.01% to 21.97%. The Bank, which identified at zero the fair value of the shares acquired, intends to dispose all of its shares of Selonda Aquacultures AEGE in the near future.
b. On 22.7.2016 the Bank covered, proportionally to its share, the increase in the share capital of the joint venture Aktua Hellas Holding SA, by paying the amount of 570 thousand.
c. On 29.7.2016 the Bank's subsidiary, Alpha Group Investments Ltd, acquired the 50% of shares of the company AEP Elaiona, for an amount of 11.9 million.
d. On 2.8.2016, the Bank covered, proportionally to its share, the increase in the share capital of the joint venture Alpha TANEO AKES by paying the amount of 90 thousand.
e. Following the evaluation of the Binding Offers, submitted by investors in the context of a process to acquire the majority stake in the share capital of Ioniki Hotel Enterprises , on 5.8.2016 it was announced by the Group that a consortium comprised of Tourism Enterprises of Messinia S.A. and D-Marine Investments Holding B.V. was selected as the preferred bidder. Alpha Bank has entered into exclusive discussions with the preferred bidder for the completion of the Process.
f. On 22.8.2016 the Bank proceeded to the acquisition of 97.27% of shares of Ioniki Hotel Enterprises .. from the related companies Alpha Group Investments Ltd, Ionian Equity Participations Ltd, Ionian Holding A.E., Oceanos A.T.O.E.E. and Alpha Supporting Services A.E. by 89.77%, 1.87%, 1.87%, 1.87% and 1.87% respectively in the context of the internal restructuring plan of the portfolio of Group Alpha Bank in order to service the business initiatives and under the agreed with the best practices terms which are followed in similar transactions.
Athens, 30 August 2016
THE CHAIRMAN
OF THE BOARD OF DIRECTORSTHE MANAGING DIRECTOR
THE GENERAL MANAGER
AND CHIEF FINANCIAL OFFICERTHE ACCOUNTING
AND TAX MANAGERVASILEIOS T. RAPANOS
ID No 666242
DEMETRIOS P. MANTZOUNIS
ID No 166670
VASILEIOS E. PSALTIS
ID No 666591
MARIANNA D. ANTONIOU
ID No 694507
Interim Financial Statements as at 30.6.2016
Interim Income Statement
(Amounts in thousands of Euro)
From 1 January to
Note
30.6.2016
30.6.2015*
Interest and similar income
1,217,793
1,323,095
Interest expense and similar charges
(394,512)
(538,633)
Net interest income
823,281
784,462
Fee and commission income
152,019
158,797
Commission expense
(20,210)
(27,886)
Net fee and commission income
131,809
130,911
Dividend income
2
75,756
1,123
Gains less losses on financial transactions
3
48,850
(29,780)
Other income
5,111
8,728
129,717
(19,929)
Total income
1,084,807
895,444
Staff costs
(197,364)
(200,018)
General administrative expenses
4
(194,496)
(185,532)
Depreciation and amortization
(35,276)
(34,144)
Other expenses
(7,677)
(1,685)
Total expenses
(434,813)
(421,379)
Impairment losses and provisions to cover credit risk
5
(520,732)
(1,966,693)
Negative goodwill from the acquisition of Diners
26
48,237
Profit/(Loss) before income tax
129,262
(1,444,391)
Income tax
6
(4,720)
335,829
Profit/(Loss) after income tax from continuing operations
124,542
(1,108,562)
Profit/(Loss) after income tax from discontinued operations
25
233
(89,319)
Profit/(loss), after income tax
124,775
(1,197,881)
Earnings/(losses) per share:
Basic and diluted (per share)
7
0.08
(4.69)
Basic and diluted from continuing operations (per share)
7
0.08
(4.34)
Basic and diluted from discontinued operations (per share)
7
0.0002
(0.3497)
* The figures for the comparative period for the Interim Income Statement have been restated due to modification of the presentation of figures related to the loyalty Bonus card program and the finalization of the Bank's Branch in Bulgaria transfer terms (note 28).
Interim Balance Sheet
(Amounts in thousands of Euro)
Note
30.6.2016
31.12.2015
ASSETS
Cash and balances with Central Banks
707,286
698,730
Due from banks
3,371,308
3,406,859
Trading securities
9
1,234
1,888
Derivative financial assets
841,878
794,471
Loans and advances to customers
8
40,988,044
41,558,014
Investment securities
- Available for sale
9
4,612,746
4,890,891
- Held to maturity
9
9,379
2,823
- Loans and receivables
9
3,683,411
4,289,482
Investments in subsidiaries, associates and joint ventures
10
2,061,023
2,087,386
Investment property
11
28,301
28,813
Property, plant and equipment
12
684,299
691,847
Goodwill and other intangible assets
13
322,063
299,821
Deferred tax assets
4,401,490
4,372,486
Other assets
1,501,852
1,421,770
63,214,314
64,545,281
Assets held for sale
25
117,100
447,601
Total Assets
63,331,414
64,992,882
LIABILITIES
Due to banks
14
23,824,225
25,170,637
Derivative financial liabilities
1,673,975
1,556,555
Due to customers
27,689,554
27,733,679
Debt securities in issue and other borrowed funds
15
338,954
406,231
Liabilities of current income tax and other taxes
11,621
21,108
Employee defined benefit obligations
16
84,939
105,816
Other liabilities
834,722
831,557
Provisions
17
413,182
410,446
54,871,172
56,236,029
Liabilities related to assets held for sale
25
338,820
Total Liabilities
54,871,172
56,574,849
EQUITY
Share capital
18
461,064
461,064
Share premium
10,790,870
10,790,870
Reserves
71,754
153,631
Retained earnings
18
(2,863,446)
(2,987,532)
Total Equity
8,460,242
8,418,033
Total Liabilities and Equity
63,331,414
64,992,882
Interim Statement of Comprehensive Income
(Amounts in thousands of Euro)
From 1 January to
Note
30.6.2016
30.6.2015
Profit/(Loss), after income tax, recognized in the Income Statement
124,775
(1,197,881)
Other comprehensive income recognized directly in Equity:
Amounts that may be reclassified to the Income Statement
Net change in available for sale securities' reserve
6
13,470
(412,125)
Net change in cash flow hedge reserve
6
(128,790)
63,792
Income tax
6
33,443
90,560
Amounts that may be reclassified to the Income Statement
6
(81,877)
(257,773)
Total comprehensive income recognized directly in Equity, after income tax
(81,877)
(257,773)
Total comprehensive income for the period, after income tax
42,898
(1,455,654)
Total comprehensive income for the period after income tax attributable to:
Equity owners of the Bank
- from continuing operations
42,665
(1,366,335)
- from dicontinued operations
233
(89,319)
Interim Statement of Changes in Equity
(Amounts in thousands of Euro)
Note
Share
CapitalShare
premiumReserves
Retained earnings
Total
Balance 1.1.2015
3,830,718
4,858,216
53,351
(1,921,112)
6,821,173
Changes for the period
1.1 - 30.6.2015
Profit for the period, after income tax
(1,197,881)
(1,197,881)
Other comprehensive income recognized directly in Equity, after income tax
6
(257,773)
(257,773)
Total comprehensive income
for the period, after income tax
-
-
(257,773)
(1,197,881)
(1,455,654)
Balance 30.6.2015
3,830,718
4,858,216
(204,422)
(3,118,993)
5,365,519
Changes for the period
1.7 - 31.12.2015
Profit for the period, after income tax
165,605
165,605
Other comprehensive income recognized directly in Equity, after income tax
358,053
3,101
361,154
Total comprehensive income
for the period, after income tax
-
-
358,053
168,706
526,759
Decrease of common shares nominal value
(3,754,104)
3,754,104
-
Share capital increase paid in cash
232,825
1,319,344
1,552,169
Share capital increase through capitalization of financial receivables
151,625
859,206
1,010,831
Share capital increase expenses, after income tax
(43,506)
(43,506)
Effect due to change of the income tax rate for share capital increase expenses
6,261
6,261
Balance 31.12.2015
461,064
10,790,870
153,631
(2,987,532)
8,418,033
(Amounts in thousands of Euro)
Note
Share
CapitalShare
premiumReserves
Retained earnings
Total
Balance 1.1.2016
461,064
10,790,870
153,631
(2,987,532)
8,418,033
Changes for the period
1.1 - 30.6.2016
Profit for the period, after income tax
124,775
124,775
Other comprehensive income recognized directly in Equity, after income tax
6
(81,877)
(81,877)
Total comprehensive income
for the period, after income tax
-
-
(81,877)
124,775
42,898
Share capital increase expenses, after income tax
(689)
(689)
Balance 30.6.2016
461,064
10,790,870
71,754
(2,863,446)
8,460,242
Interim Statement of Cash Flows
(Amounts in thousands of Euro)
From 1 January to
Note
30.6.2016
30.6.2015
Cash flows from continuing operating activities
Profit/(Loss) before income tax
129,262
(1,444,391)
Adjustments for gains/(losses) before income tax for:
Depreciation/ impairment of fixed assets
11.12
16,034
16,232
Amortization of intangible assets
13
19,242
17,912
Impairment losses from loans, provisions and staff leaving indemnity
500,914
1,979,720
Impairment of investments
29,363
(48,237)
(Gains)/losses from investing activities
(109,402)
61,824
(Gains)/losses from financing activities
29,913
52,422
615,326
635,482
Net (increase)/decrease in Assets relating to continuing operating activities:
Due from banks
123,361
937,465
Trading securities and derivative financial assets
(46,753)
221,853
Loans and advances to customers
63,078
(1,716,218)
Other assets
(7,883)
(78,676)
Net increase/(decrease) in Liabilities relating to continuing operating activities:
Due to banks
(1,349,563)
10,925,398
Derivative financial liabilities
(11,370)
(59,018)
Due to customers
(47,253)
(10,530,923)
Other liabilities
836
(75,678)
Net cash flows from continuing operating activities before taxes
(660,221)
259,685
Income taxes and other taxes paid
(9,486)
(24,940)
Net cash flows from continuing operating activities
(669,707)
234,745
Net cash flows from discontinued operating activities
(17,434)
17,496
Cash flows from continuing investing activities
Investments in subsidiaries, associates and joint ventures
(69,771)
6,741
Acquisitions of the Retail Banking operations of Citibank
10,046
Dividends received
5,116
1,409
Acquisitions of fixed and intangible assets
(53,883)
(33,866)
Disposals of fixed and intangible assets
892
1,102
Net (increase)/decrease in investment securities
865,799
(605,182)
Net cash flows from continuing investing activities
748,153
(619,750)
Net cash flows from discontinued investing activities
(9,906)
(195)
Cash flows from continuing financing activities
Share capital increase expenses
(970)
Repayments of debt securities in issue and other borrowed funds
(87,622)
(72,427)
Net cash flows from continuing financing activities
(88,592)
(72,427)
Effect of exchange rate differences on cash and cash equivalents
(418)
1,153
Net increase/(decrease) in cash flows from continuing operating activities
(10,564)
(456,279)
Net increase/(decrease) in cash flows from discontinued operating activities
(27,340)
17,301
Cash and cash equivalents at the beginning of the period
765,248
1,223,029
Cash and cash equivalents at the end of the period
727,344
784,051
Notes to the Interim Financial Statements
General Information
The Bank A.E. 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 30.6.2016 consists of:
CHAIRMAN (Non Executive Member)
Vasileios T.Rapanos
VICE CHAIRMAN (Non Executive Independent Member)
Pavlos A.Apostolides **/****
EXECUTIVE MEMBERS
MANAGING DIRECTOR
Demetrios P.Mantzounis
EXECUTIVE DIRECTORS AND GENERAL MANAGERS
Spyros N.Filaretos (COO)
Artemios Ch.Theodoridis
George C.Aronis
NON-EXECUTIVE MEMBERS
Efthimios O.Vidalis
Ioanna E.Papadopoulou ****
NON-EXECUTIVE INDEPENDENT MEMBERS
Evangelos J.Kaloussis */***
Ioannis K.Lyras */**
Ibrahim S.Dabdoub **
Shahzad A.Shahbaz ***/****
Jan 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
George P.Triantafyllides
At its meeting held on 28.7.2016, the Board of Directors of Alpha Bank elected Mr. Richard R. Gildea as Member of the Board of Directors of the Bank, for the remainder of its tenure, in replacement of Mrs Ioanna E.Papadopoulou 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 has appointed for the fiscal year 2016 KPMG Certified Auditors A.E. as Certified auditors of the Bank, by the following:
a. Principal Auditors: Nikolaos E.Vouniseas
John A.Achilas
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, the Stoxx Europe 600 and FTSE Med 100.
Apart from the Greek listing, the shares of the Bank are listed in the London Stock Exchange in the form of international certificates (GDRs) and they are traded over the counter in New York (ADRs).
Total common shares in issue as at 30 June 2016 were 1,536,881,200.
In Athens Stock Exchange are traded 1,367,706,054 common shares of the Bank, while the Hellenic Financial Stability Fund ("HFSF") possesses the remaining 169,175,146 common, registered, voting, paperless shares or percentage equal to 11.01% on the total of common 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 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 first semester of 2016, the average daily volume per session for shares was 20,970,465 and for warrants 6,500.
The credit rating of the Bank performed by three international credit rating agencies is as follows:
Moody's: Caa3
Fitch Ratings: RD
Standard & Poor's: SD (from 2.8.2016 CCC+)
According to Law 4374 published in 1 April 2016, the obligation to publish quarterly financial statements for the first and third quarter of the financial year, pursuant to the provisions of Article 6 of Law 3556/2007 before its amendment, was
abolished.Furthermore, according to No. 8/754/14.04.2016 decision of the Hellenic Capital Market Commission with subject "Special Topics Periodic Reporting according to Law. 3556/2007", the obligation to publish Data and Information arising from the quarterly and semi-annual 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.
The financial statements have been approved by the Board of Directors on 30 August 2016.
Accounting Policies Applied
1.1 Basis of presentation
The Bank has prepared the condensed interim financial statements as at 30.6.2016 in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as it has been adopted by the European Union. The financial statements have been prepared on the historical cost basis. As an exception, some assets and liabilities are measured at fair value. Those assets are mainly the following:
- Securities held for trading
- Derivative financial instruments
- Available for sale securities
- The convertible bond issued by the Bank which is included in "Debt securities in issue and other borrowed funds"
The financial statements are presented in Euro, rounded to the nearest thousand, unless otherwise indicated.
The accounting policies applied by the Bank in preparing the condensed interim financial statements are consistent with those stated in the published financial statements for the year ended on 31.12.2015, 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 11 "Joint Arrangements": Accounting for acquisition of interests in joint operations (Regulation 2015/2173/24.11.2015)
Amendment to International Accounting Standard 1 "Presentation of Financial Statements": Disclosure Initiative (Regulation 2015/2406/18.12.2015)
Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and to International Accounting Standard 38 "Intangible Assets": Clarification of Acceptable Methods of Depreciation and Amortization (Regulation 2015/2231/2.12.2015)
Amendment to International Accounting Standard 16 "Property, Plant and Equipment" and to International Accounting Standard 41 "Agriculture": Bearer Plants (Regulation 2015/2113/23.11.2015)
Amendment to International Accounting Standard 27 "Separate Financial Statements": Equity Method in Separate Financial Statements (Regulation 2015/2441/18.12.2015)
Improvements to International Accounting Standards - cycle 2012-2014 (Regulation 2015/2343/15.12.2015)
The adoption of the above amendments by the Bank, an analysis of which is presented in note 1.1 of the Financial Statements as at 31.12.2015, had no impact on its financial statements.
The adoption by the European Union, by 31.12.2016, of new standards, interpretations or amendments, which have been issued or may be issued during the year by the International Accounting Standards Board (IASB), and their mandatory or optional adoption for periods beginning on or after 1.1.2016, may affect retrospectively the periods presented in these interim financial statements.
1.2 Estimates, decision making criteria and significant sources of uncertainty
The Bank, in the context of applying accounting policies and preparing financial statements in accordance with the International Financial Reporting Standards, makes estimates and assumptions that affect the amounts that are recognized as income, expenses, assets or liabilities. The use of estimates and assumptions is an integral part of recognizing amounts in the financial statements that mostly relate to the following:
Fair value of assets and liabilities
For assets and liabilities traded in active markets, the determination of their fair value is based on quoted, market prices. In all other cases the determination of fair value is based on valuation techniques that use observable market data to the greatest extent possible. In cases where there is no observable market data, the fair value is determined using data that are based on internal estimates and assumptions eg. determination of expected cash flows, discount rates, prepayment probabilities or potential counterparty default.
Impairment losses of financial assets
The Bank, when performing impairment tests on loans and advances to customers, makes estimates regarding the amount and timing of future cash flows. Given that these estimates are affected by a number of factors such as the financial position of the borrower, the net realizable value of any collateral or the historical loss ratios per portfolio, actual results may differ from those estimated. Similar estimates are used in the assessment of impairment losses of securities classified as available for sale or held to maturity.
Impairment losses of non - financial assets
The Bank, at each year end balance sheet date, assesses for impairment non - financial assets, and in particular property, plant and equipment, investment property, goodwill and other intangible assets, as well as its investments in subsidiaries, associates and joint ventures. Internal estimates are used to a significant degree to determine the recoverable amount of the assets, i.e. the higher between the fair value less costs to sell and the value in use.
Income Tax
The Bank recognizes assets and liabilities for current and deferred tax, as well as the related expenses, based on estimates concerning the amounts expected to be paid to or recovered from tax authorities in the current and future periods. Estimates are affected by factors such as the practical implementation of the relevant legislation, the expectations regarding the existence of future taxable profit and the settlement of disputes that might exist with tax authorities etc. Future tax audits, changes in tax legislation and the amount of taxable profit actually realised may result in the adjustment of the amount of assets and liabilities for current and deferred tax and in tax payments other than those recognized in the financial statements of the Bank. Any adjustments are recognized within the year that they become final.
Employee defined benefit obligations
Defined benefit obligations are estimated based on actuarial valuations that incorporate assumptions regarding discount rates, future changes in salaries and pensions, as well as the return on any plan assets. Any change in these assumptions will affect the amount of obligations recognized.
Provisions and contingent liabilities
The Bank recognises provisions when it estimates that it has a present legal or constructive obligation that can be estimated reliably and it is almost certain that an outflow of economic benefits will be required to settle the obligation. In contrast, when it is probable that an outflow of resources will be required, or when the amount of liability cannot be measured reliably, the Bank does not recognise a provision but it provides disclosures for contingent liabilities, taking into consideration their materiality. The estimation for the probability of the outflow as well as for the amount of the liability are affected by factors which are not controlled by the Bank, such as court decisions, the practical implementation of the relevant legislation and the probability of default of the counterparty, for those cases which are related to the exposure to off-balance sheet items.
The estimates and judgments applied by the Bank in making decisions and in preparing the financial statements are based on historical information and assumptions which at present are considered appropriate. The estimates and judgments are reviewed on an ongoing basis in order to take into account current conditions, and the effect of any changes is recognized in the period in which the estimates are revised.
1.2.1 Going concern principle
The Bank applied the going concern principle for the preparation of the financial statements as at 30.6.2016. For the application of this principle, the Bank takes into consideration current economic developments in order to make projections for future economic conditions of the environment in which it operates. The main factors that cause uncertainties regarding the application of this principle relate to the adverse economic environment in Greece and abroad and to the liquidity levels of the Hellenic Republic and the banking system.
Specifically, the high degree of uncertainty that characterizes the internal economic environment in recent years, as a result of the prolonged recession of the Greek economy, led to a significant deterioration in the creditworthiness of corporate and individuals, to an increase of non performing loans and therefore to the recognition of significant impairment losses by the Bank and by the Greek banking system in general. Additionally, during the first semester of the previous year, the internal economic environment was adversely affected by the uncertainties that were created during the negotiations of the Hellenic Republic with the European Commission, the European Central Bank and the International Monetary Fund for the financing of the Hellenic Republic, a fact that led to significant outflows of deposits, to the imposition of capital controls and of a bank holiday which was announced on 28.6.2015 and lasted until 19.7.2015. Capital controls remain in place until the date of approval of the financial statements, while the detailed provisions for their application are amended where appropriate by the adoption of a legislative act.
At the same time the liquidity needs of Greek banks continue to be mostly satisfied by the emergency liquidity mechanisms of the Bank of Greece.
The completion, in the third quarter of 2015, of the negotiations of the Hellenic Republic for the coverage of the financing needs of the Greek economy, led to an agreement for new financial support by the European Stability Mechanism. The agreement provided for the coverage of the financing needs of the Hellenic Republic for the medium-term period, under the condition that economic reforms are made, while additionally it provided for the allocation of resources to cover the recapitalization needs of the banks as a result of their assessment by the Single Supervisory Mechanism. With respect to the Bank specifically, a recapitalization of a total amount of 2,563 million took place in the fourth quarter of 2015, exclusively from private funds, as further analyzed in note 39 of the annual financial statements as at 31.12.2015.
In June of the current year the first evaluation of the Hellenic Republic financial support program was completed and the partial disbursement of the second installment of the program, amounting to 10.3 billion, was approved. The first disbursement of 7.5 billion took place in June and covered the short-term public debt servicing needs as well as the clearance of part of amounts overdue by the Hellenic Republic. The remaining amount of 2.8 billion is expected to be disbursed within the second semester of 2016, provided that a series of prerequisite actions are completed. The completion of the first evaluation and the disbursement of installments are expected to contribute to the enhancement of the real economy and the improvement of investment prospects. The above, combined with the continuation of reforms and the measures described in the Eurogroup statement for the enhancement of the sustainability of the Greek debt (note 1.2.2), are expected to contribute to the gradual improvement of the economic environment in Greece and to the return of the economy to positive growth rates.
In parallel to the above, the Bank, in the context of its strategy to address the issue of non performing loans, is taking a series of actions and initiatives, as specifically mentioned in the relevant section of the Board of Director's Semi-annual Management Report, which, combined with the changes in the legislative framework, are expected to contribute to the effective management of the non performing loans portfolio.
With regards to the liquidity levels and funding costs of the Bank and the banking system in general, they have been positively affected by the reinstatement of Greek government securities in the perimeter of collaterals accepted by the European Central Bank, by the reduction of the haircut applied on eligible collaterals and by the ability to transfer part of the securities issued by the European Financial Stability Fund that the Bank holds to the European Central Bank, as mentioned in note 9 of the financial statements.
Based on the above and taking into account the Group's high capital adequacy and the ability of the Bank to access the liquidity mechanisms of the eurosystem, the Bank estimates that the conditions for the application of the going concern principle for the preparation of its financial statements are met.
1.2.2 Estimation of the Bank's exposure to the Hellenic Republic
The Bank's total exposure to Greek Government securities and loans related to the Hellenic Republic has not changed significantly compared to what is stated in note 38.1 of the financial statements as at 31.12.2015. The main uncertainties regarding the estimations for the recoverability of the Bank's total exposure relate to the debt service capacity of the Hellenic Republic, which, in turn, is affected by the development of the macroeconomic environment in Greece and the Eurozone as well as by the levels of liquidity of the Hellenic Republic.
Following the successful outcome of the negotiations of the Hellenic Republic for the coverage of the financing needs of the Greek economy, which were completed with the signing of a relative agreement with the European Stability Mechanism on 19.8.2015, a three-year funding (which could amount to 86 billion) was ensured, provided that specific commitments that relate to the achievement of specific financial targets and the implementation of reforms in the Greek economy will be respected. The financing agreement with the European Stability Mechanism is expected to cover the financing needs of the Hellenic Republic and in parallel to contribute to the growth of the Greek economy. In addition, it was agreed that upon the first positive assessment of the program, which was completed in June of the current year, measures will be taken for Greek debt relief in order to enhance its sustainability.
Pursuant to the above, in the Eurogroup of 9.5.2016 the framework based on which the sustainability of the Greek debt will be assessed was set. In the Eurogroup of 24.5.2016 the measures for the enhancement of the sustainability of the Greek debt were further specified, separately for the short, the medium and the long term. Based on this framework, under the baseline scenario, gross financing needs of the Hellenic Republic should remain below 15% of GDP during the post programme period for the medium term and below 20% of GDP thereafter. By taking these measures, the finalization of which is expected in subsequent meetings of the Eurogroup, it is estimated that the service capacity of the Greek debt will be improved.
Based on the above, the Bank has not recognized impairment losses on the Greek Government securities it holds as at 30.6.2016, however, it assesses the developments relating to the Greek Government debt in conjunction with the market conditions and it reviews its estimations for the recoverability of its total exposure at each reporting date.
1.2.3 Recoverability of deferred tax assets
The Bank recognizes deferred tax assets to the extent that it is probable that it will have sufficient future taxable profit available, against which, deductible temporary differences and tax losses carried forward can be utilized. The amount of deferred tax assets recognized in the financial statements as at 30.6.2016 has not changed significantly compared with the corresponding amount of 31.12.2015. Therefore, what is stated in note 1.29.3 of the annual financial statements of 31.12.2015, regarding the main categories of deferred tax assets recognized is also applicable to these financial statements. In addition, with regards to the methodology applied for the assessment of recoverability of deferred tax assets, what is stated in the above note of the annual financial statements applies, taking also into account the factors that formulated the results of the first semester of the current year.
Income Statement
2. Dividend income
From 1 January to
30.6.2016
30.6.2015
Available for sale securities
449
405
Subsidiaries and associates
75,307
718
Total
75,756
1,123
On 30.6.2016 the Bank proceeded to the accounting of dividends whose distribution has been approved by the Ordinary General Meetings of its subsidiaries.
3. Gains less losses on financial transactions
From 1 January to
30.6.2016
30.6.2015
Foreign exchange differences
10,613
(3,360)
Trading securities:
- Bonds
515
1,435
Investment securities
- Bonds
12,412
(123,531)
- Shares
61,273
(458)
- Other securities
(1,143)
Loans and receivables
10,876
Investments
(34,279)
4,851
Derivative financial instruments
(19,586)
41,996
Other financial instruments
8,169
49,287
Total
48,850
(29,780)
On June 21, 2016, Visa Inc. completed the acquisition of Visa Europe. According to the relevant contract (as amended on 10.05.2016), at the date of completion of the transaction, Visa Inc. purchased from Visa Europe's members the shares they held due to their membership. The price for this acquisition consists of:
i. The payment of a total amount of 12.25 billion upon completion of the transaction.
ii. The distribution of preferred shares.
iii. The payment of the amount of 1 billion on the third anniversary of the closing of the transaction plus interest.
The calculation of the transaction price was based on Visa Europe's net revenue contributed by each member for a specific period of time.
In this context, during the second quarter of the current period the Bank recognized as gains less losses on financial transactions the amount of 44.9 million. This amount consists of the cash received at the closing of the transaction and the recognition of the present value of the deferred payment on the third anniversary.
In addition, the Bank recognized during the year the preference shares of Visa Inc. acquired iunder with the transaction. These shares, which were classified as available for sale portfolio, were recognized at a fair value of 13.2 million and recorded in caption "Gains less losses on financial transactions".
4. General administrative expenses
From 1 January to
30.6.2016
30.6.2015
Operating leases for buildings
15,875
16,734
Rent and maintenance of EDP equipment
9,569
9,068
EDP expenses
12,391
11,419
Marketing and advertisement expenses
9,084
8,143
Telecommunications and postage
10,094
8,295
Third party fees
13,560
15,244
Consultants fees
2,701
2,648
Contribution to the Deposit Guarantee Fund / Investments Fund and Solvency Fund
25,679
16,325
Insurance
4,949
3,368
Consumables
2,133
2,049
Electricity
3,635
4,665
Taxes (VAT, real estate etc)
27,668
29,078
Services from collection agencies
12,760
9,129
Building and equipment maintenance
2,648
2,742
Security
4,071
4,332
Cleaning fees
1,568
1,610
Other
36,111
40,683
Total
194,496
185,532
On 23.7.2015 Law 4335/2015, incorporated the European Directive 2014/59 into Greek law to establish a framework for the recovery and resolution of credit institutions and investment entities. In particular, the Resolution Scheme of Hellenic Deposit and Investment Guarantee Fund (HDIGF) is defined as the National Resolution Fund which within ten years (until 31 December 2024) should gradually, create a reserve equal to at least 1% of the deposits guaranteed by the HDIGF. From 1.1.2016, the Single Resolution Mechanism (SRM) is responsible for the resolution of credit institutions established in country-member states of the Eurozone. It operates in cooperation with the Single Resolution Fund (SRF), which will cover the resolution costs of non-sustainable credit institutions.
According to Law 4335/2015 (Article 98), credit institutions authorized to operate in Greece, including branches operating in third countries, should make at least an annual contribution to the Resolution Fund. According to Law 4370/2016 (Article 36), in case a credit institution enters the Resolution Fund or another ceases its participation in it during the fiscal year, the credit institution is still for its regular contribution for the fiscal year in proportion to the time of its operation. In addition with law 4370/2016, the Directive 2014/49 / EU of the European Parliament and the Decision of the Council of 16 April 2014 was incorporated into Greek law which enacts the same rules for all Deposit Guarantee Schemes intended to provide a uniform level of protection to all EU depositors and to ensure the same level of stability as regards the DGS.
The Single Resolution Board, determined that the 2016 contribution for credit institutions may provide irrevocable payment commitments amounting up to 15% of their total obligation which for the Bank amounts to 21 million. These irrevocable payment commitments have to be fully covered by cash collateral. On 20.05.2016, the Bank signed a contract with the Single Resolution Board to provide irrevocable payment commitment and establish the necessary cash collateral for the 2016 contribution.
General Administrative Expenses of the first semester of 2015 did not have such contribution.
5. Impairment losses and provisions to cover credit risk
From 1 January to
30.6.2016
30.6.2015
Impairment losses on loans and advances to customers (note 8)
526,803
1,972,610
Provisions to cover credit risk relating to off balance sheet items (note 17)
3,210
4,725
Recoveries
(9,281)
(10,642)
Total
520,732
1,966,693
The first semester of 2016 significantly burdened from the recognition of impairment losses for Group of companies, taking into account the conditions, the ongoing developments and the proposals made for the restructuring of loans until the publication of the financial statements as at 30 June 2016.
Respectively, the a' semester of 2015 was burdened with significant impairment losses, after taking into consideration the special conditions that existed in the Greek economy and affected the recoverability estimations of the loan portfolio, in the respected period and until the date of the publication of the 30.6.2015 financial statements.
6. Income tax
In accordance with Article 1 par 4 of Law 4334/2015 "Urgent prerequisites for the negotiation and conclusion of an agreement with the European Stability Mechanism (ESM)" the corporate income tax rate for legal entities increased from 26% to 29%. The increased rate will apply for profits arising in fiscal years commencing on or after 1 January 2015 without on the absence of an explicit definition in the law regarding the retrospective application of income tax rate for profits of fiscal year 2014.
In accordance with article 65A of Law 4174/2013, from 2011 the statutory auditors and audit firms conducting statutory audits to a Societe Anonyme, are obliged to issue an Annual Tax Certificate on the compliance on tax issues. This tax certificate is submitted to the entity being audited within 10 days from the submission of the corporate income tax return, as well as electronically to the Ministry of Finance, no later than 10 days following the date of the approval of the financial statements from the Ordinary Shareholders General Meeting. In accordance with article 56 of Law 4410/3.8.2016 for the fiscal years from 1.1.2016, the issuance of tax certificate is rendered optional.
For fiscal years 2011 up to 2014 the tax audit of the Bank has been completed and the Bank has received tax certificate without any qualifications, whereas for year 2015 the tax audit has been completed and the Bank is expected to receive tax certificate without any qualifications.
Income tax expense is analyzed as follows:
From 1 January to
30.6.2016
30.6.2015
Deferred tax
4,720
(335,829)
Total
4,720
(335,829)
Deferred tax recognized in the income statement is attributable to temporary differences, the effect of which is analyzed in the table below:
From 1 January to
30.6.2016
30.6.2015
Debit difference of Law 4046/2012
22,277
19,973
Depreciation and write-offs of fixed assets
6,610
4,453
Valuation/impairment of loans
(57,910)
(386,024)
Valuation of loans due to hedging
(640)
(550)
Employee defined benefit obligations and insurance funds
25,185
17,095
Valuation of derivatives
(6,054)
14,012
Effective interest rate
(279)
(832)
Fair value change of liabilities to credit institutions and other borrowed funds due to fair value hedge
3,471
(2,433)
Valuation of investments
(20,243)
(4,947)
Valuation/impairment of bonds and other securities
13,506
18,281
Tax losses carried forward
23,965
(29,577)
Other temporary differences
(5,168)
14,720
Total
4,720
(335,829)
A reconciliation between the nominal and effective tax rate is provided below:
From 1 January to
30.6.2016
30.6.2015
%
%
Profit/(loss) before income tax
129,262
(1,444,391)
Income tax (nominal tax rate)
29
37,486
26
(375,542)
Increase/(decrease) due to:
Non taxable income
(25.51)
(32,974)
0.08
(1,153)
Non deductible expenses
0.72
932
(2.76)
39,848
Other tax adjustments
(0.56)
(724)
(0.07)
1,018
Income tax
3.65
4,720
23.25
(335,829)
According to article 5 of Law 4303/17.10.2014 "Ratification of the Legislative Act "Emergency legislation to replenish the General Secretary of Revenue upon early termination of office" (A 136) and other provisions", deferred tax assets of legal entities supervised by the Bank of Greece, under article 26 paragraphs 5, 6 and 7 of Law 4172/2013 that have been or will be recognized and are due to the debit difference arising from the PSI and the accumulated provisions and other general losses due to credit risk, with respect to existing amounts up to 31 December 2014, are converted into final and settled claims against the State, if, the accounting result for the period, after taxes is a loss according to the audited and approved financial statements by the Ordinary Shareholders' General Meeting.
The inclusion in the Law is implemented by the General Meeting of Shareholders, related to tax assets from 2016 onwards, whereas it is envisaged the end of inclusion in the law with the same procedure and after obtaining relevant approval from the Regulatory Authority.
According to article 4 of Law 4340/01.11.2015 "Recapitalization of financial institutions and other provisions of the Ministry of Finance" the above were amended regarding the time of the application which is postponed for a year. In addition, the amount of deferred tax asset which is included to the same legislation is limited to the amount related to the debit charge of PSI and provisions for credit risk, which were accounted until 30 June 2015. Furthermore, it is clarified that in cases of conversion of deferred tax assets into a final and a settled claim against the Greek State the "resolution process" of credit institutions is not included.
Dated June 30, 2016 the amount of deferred tax assets which is estimated to be within the scope of the aforementioned Law is 3,364,080 (31.12.2015: 3,386,356).
Income tax of other comprehensive income recognized directly in Equity
From 1 January to
30.6.2016
30.6.2015
Before income tax
Income tax
After
income taxBefore income tax
Income tax
After
income taxAmounts that may be reclassified to the Income Statement
Net change in available for sale securities' reserve
13,470
(3,906)
9,564
(412,125)
107,146
(304,979)
Net change in cash flow hedge reserve
(128,790)
37,349
(91,441)
63,792
(16,586)
47,206
Total
(115,320)
33,443
(81,877)
(348,333)
90,560
(257,773)
During the first semester of 2016, "Retained earnings" includes tax amounting to 281 arising from the share capital increase expenses which were recognized in the same account and relates to the share capital increase which took place during 2015.
7. Earnings/(losses) per share
a. Basic
Basic earnings/(losses) per share are calculated by dividing the profit/(losses) after income tax attributable to ordinary equity owners of the Bank, by the weighted average number of outstanding ordinary shares of the period, after deducting the weighted average number of treasury shares held by the Bank during the same period.
b. Diluted
Diluted earnings/(losses) per share are calculated by adjusting the weighted average number of ordinary shares outstanding to the presumed conversion amount of all dilutive potential ordinary shares. The Bank does not have any dilutive potential ordinary shares and in addition, based on the issuance terms of the convertible bond loan with Credit Agricole S.A., basic and dilutive earnings/(losses) per share should not differ.
From 1 January to
30.6.2016
30.6.2015
Profit/(loss) attributable to Equity owners of the Bank
124,775
(1,197,881)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share (in )
0.08
(4.69)
From 1 January to
30.6.2016
30.6.2015
Profit/(loss) from continuing operations attributable to Equity owners of the Bank
124,542
(1,108,562)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share (in )
0.08
(4.34)
From 1 January to
30.6.2016
30.6.2015
Profit/(loss) from discontinued operations attributable to Equity owners of the Bank
233
(89,319)
Weighted average number of outstanding ordinary shares
1,536,881,200
255,381,197
Basic and diluted earnings/(losses) per share (in )
0.0002
(0.3497)
The weighted average number of the ordinary shares as at 30.6.2015, has been retrospectively restated from the beginning of the year, after the decrease of the total number of shares due to the merger in proportion of 50 voting common shares of old nominal value to 1 voting common share of new nominal value which took place on November 2015.
Assets
8. Loans and advances to customers
30.6.2016
31.12.2015
Individuals
Mortgages
- Non-securitized
16,335,508
16,589,955
Consumer:
- Non-securitized
3,552,262
3,448,236
- Securitized
1,243,419
1,299,934
Credit cards:
- Non-securitized
655,297
653,766
- Securitized
544,701
565,583
Total
22,331,187
22,557,474
Companies:
Corporate loans:
- Non-securitized
26,373,308
26,275,219
- Securitized
1,997,082
2,126,179
Other receivables
292,534
376,383
50,994,111
51,335,255
Less:
Allowance for impairment losses (1)
(10,006,067)
(9,777,241)
Total
40,988,044
41,558,014
The Bank has proceeded in securitization of consumer, corporate loans and credit cards through special purpose entities controlled by them.
Additionally, in 2014, the Bank proceeded in securitizing shipping loans by transferring the loans to the special purpose entity, Alpha Shipping Finance Ltd.
Based on the contractual terms and structure of the above transactions (e.g. allowance of guarantees or/and credit enhancement or due to the Bank owing the bonds issued by the special purpose entities), the Bank retained in all cases the risks and rewards deriving from the securitized portfolios.
The Bank has proceeded on 8.7.2015 in the cancelation of an amount of 3.75 billion of covered bonds that had issued, secured by mortgage loans. As at 30.6.2016, the balance of the covered bonds amounts to 5 million (note 15). The value of mortgage loans provided as coverage for these bonds amounts to 16.7 million.
(1) In addition to the allowance of impairment losses regarding loans and advances to customers, a provision of 298,203 (31.12.2015: 294,993) has been recorded to cover credit risk relating to off-balance sheet items. The total provision recorded to cover credit risk amounts to 10,304,270 (31.12.2015: 10,072,234).
Allowance for impairment losses
Balance 1.1.2015
6,944,450
Changes for the period 1.1 - 30.6.2015
Impairment losses for the period from continuing operations (note 5)
1,972,610
Impairment losses for the period from discontinued operations
174
Transfer of accumulated provisions to assets held for sale
(110,626)
Change in present value of impairment losses from continuing operations
215,326
Change in present value of impairment losses from discontinued operations
1,435
Foreign exchange differences
8,678
Loans written-off during the period
(101,198)
Balance 30.6.2015
8,930,849
Changes for the period 1.7 - 31.12.2015
Impairment losses for the period from continuing operations
721,391
Transfer of accumulated provisions from assets held for sale
6,936
Change in present value of impairment losses from continuing operations
259,607
Foreign exchange differences
219
Loans written-off during the period
(141,761)
Balance 31.12.2015
9,777,241
Changes for the period 1.1 - 30.6.2016
Impairment losses for the period (note 5)
526,803
Transfer of accumulated provisions to assets held for sale
(100,000)
Change in present value of impairment losses
217,243
Foreign exchange differences
(893)
Loans written-off during the period
(414,327)
Balance 30.6.2016
10,006,067
9. Trading and investment securities
a. Trading securities
Securities held for trading amounted to 1.2 million on 30.6.2016 (31.12.2015: 1.9 million) out of which Greek government bonds 1.2 million (31.12.2015: 1.9 million).
b. Available for sale
The available for sale portfolio amounted to 4.6 billion as at 30.6.2016 (31.12.2015: 4.9 billion). These amounts include securities issued by the Greek State amounted to 3.6. billion as at 30.6.2016 (31.12.2015: 3.8 billion) out of which 1.8 billion (31.12.2015: 2.1 billion) related to Greek Government treasury bills.
The Bank during the first semester of 2016 has recognized impairment losses for shares amounting to 1,314 and for mutual funds amounting to 1,143 which are included in caption "Gains less losses on financial transactions".
c. Held to maturity
The held to maturity portfolio amounts to 9.4 million as at 30.6.2016 (31.12.2015: 2.8 million).
d. Loans and receivables
Loans and receivables include bonds issued by the European Financial Stability Facility (E.F.S.F.) at a nominal value of 3,960,544 received by the Bank as a result of the share capital increase which was completed on 6.6.2013 and of nominal value of 284,628 which were transferred to the Bank from the Hellenic Financial Stability Fund for the undertaking of customer deposits from the former Cooperative Banks of West Macedonia, Evia and Dodecanese in December 2013.
These bonds under the original contract could only be used as collateral to obtain liquidity from the Eurosystem or from interbank counterparties in repo agreements. In April 2016 the subscription agreement between the European Financial Stability Fund (EFSF), the Hellenic Financial Stability Fund (HFSF) and the Bank was revised. The revision refers to the terms of use of the above bonds. The revision states that the Bank may participate with the EFSF bonds in the purchase programme, conducted by ECB, for the bonds issued by central governments, special bodies-securities issuers and European supranational institutions of the Eurozone (Public Sector Purchase Programme - PSPP). According to the ECB's decision, a total up to 50% of each EFSF issue can be purchased until the completion of the program in March 2017. During the first semester of 2016, the Bank conducted sale transactions of EFSF securities at a nominal value of 595 million, under the PSPP program.
The total book value of these bonds on 30.6.2016 was 3.7 billion. (31.12.2015: 4.3 billion.).
10. Investments in subsidiaries, associates and joint ventures
1.1-30.6.2016
1.7-31.12.2015
1.1-30.6.2015
Subsidiaries
Opening balance
2,017,859
2,011,693
2,015,422
Additions
69,720
35,000
33,955
Disposals
(41,113)
Transfer due to reclassification to assets held for sale
(35,245)
(26,753)
Valuation of investments due to fair value hedge (1)
(4,916)
(2,081)
3,429
Closing balance
2,047,418
2,017,859
2,011,693
Associates
Opening balance
631
631
631
Closing balance
631
631
631
Joint ventures
Opening balance
68,896
56,930
56,636
Additions
6,022
11,966
344
Disposals
(50)
Transfer due to reclassification to assets held for sale
(61,944)
Closing balance
12,974
68,896
56,930
Total
2,061,023
2,087,386
2,069,254
Additions represent: share purchases, participation in share capital increases and acquisitions of shares due to mergers.
Disposals represent: sales of shares, return of capital, proceeds arising from the liquidation of companies, contributions in kind and impairments.
The additions in subsidiaries amounting to 69,720 relate to the participation of the Bank to the share capital increase of its subsidiary company Alpha Group Investments Ltd. (note 27).
The transfer of subsidiary due to reclassification to assets held for sale amounting to 35,245 relates to the subsidiary APE Fixed Assets A.E. which on 30.6.2016 met the conditions required by IFRS 5, as presented in detail in note 25.
The additions in joint ventures amounting to 6,022 relate to:
a. 5,926 to the joint venture Aktua Hellas Holdings AE with costs related with its establishment.
b. 45 to the participation of the Bank to the share capital increase of the same joint venture (note 27) and
c. 51 to the participation of the Bank to the share capital increase of ALPHA-TANEO AKES (note 27).
The transfer of joint ventures to assets held for sale amounting to 61,944 relates to the joint ventures APE Commercial Property and APE Investment Property amounting to 50,150 and 11,794 respectively, which on 30.6.2016 met the conditions required by IFRS 5, as presented in detail in note 25.
(1) The Bank uses FX swaps and money market loans to hedge the foreign exchange risk of its investments in subsidiaries abroad.
11. Investment property
Land - Buildings
Balance 1.1.2015
Cost
46,149
Accumulated depreciation and impairment losses
(14,210)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
31,939
Reclassification of investment assets from discontinued operations to "Asset held for sale"
(1,268)
Additions from continuing operations
5
Reclassification to "Other Assets"
(939)
Depreciation charge for the period from continuing operations
(186)
Depreciation charge for the period from discontinued operations
(9)
Net book value 30.6.2015
29,542
Balance 30.6.2015
Cost
43,845
Accumulated depreciation and impairment losses
(14,303)
1.7.2015 - 31.12.2015
Net book value 1.7.2015
29,542
Additions
2
Impairments
(546)
Depreciation charge for the period from continuing operations
(185)
Net book value 31.12.2015
28,813
Balance 31.12.2015
Cost
43,847
Accumulated depreciation and impairment losses
(15,034)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
28,813
Additions
32
Reclassification to "Other Assets"
(361)
Depreciation charge for the period
(183)
Net book value 30.6.2016
28,301
Balance 30.6.2016
Cost
43,470
Accumulated depreciation and impairment losses
(15,169)
During the current period there was no significant variation in investment property.
In 2015, an impairment loss amounting to 546 was recognized, in order for the carrying amount of investment property not to exceed their recoverable amount as at 31.12.2015, as estimated by certified valuators. The impairment amount was recorded in "Other Expenses".
12. Property, plant and equipment
Land and Buildings
Leased Equipment
Equipment
Total
Balance 1.1.2015
Cost
984,065
784
383,690
1,368,539
Accumulated depreciation and impairment losses
(306,185)
(144)
(332,625)
(638,954)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
677,880
640
51,065
729,585
Reclassification of assets from discontinued operations to "Assets held for sale"
(3,583)
(2,349)
(5,932)
Additions
2,905
8,371
11,276
Additions from discontinued operations
127
70
197
Disposals/write-offs
(633)
(13)
(646)
Disposals/write-offs from discontinued operations
(120)
(25)
(145)
Reclassification to "Other Assets"
(5,778)
(18)
(5,796)
Reclassification from "Other Assets"
18
18
Depreciation charge for the period from continuing operations
(9,030)
(54)
(6,962)
(16,046)
Depreciation charge for the period from discontinued operations
(349)
(241)
(590)
Net book value 30.6.2015
661,420
568
49,934
711,922
Balance 30.6.2015
Cost
965,235
753
378,082
1,344,070
Accumulated depreciation and impairment losses
(303,815)
(185)
(328,148)
(632,148)
1.7.2015 - 31.12.2015
Net book value 1.7.2015
661,420
568
49,934
711,922
Additions
3,079
5,219
8,298
Impairments
(1,061)
(1,061)
Disposals/write-offs
(1,796)
(11)
(1,807)
Reclassification to "Other Assets"
(8,328)
(450)
(8,778)
Reclassification from "Other Assets"
1
1
Reclassification from "Equipment" to "Land and buildings"
5
(5)
Depreciation charge for the period from continuing operations
(9,084)
(53)
(7,591)
(16,728)
Net book value 31.12.2015
644,235
515
47,097
691,847
Balance 31.12.2015
Cost
954,445
752
361,921
1,317,118
Accumulated depreciation and impairment losses
(310,210)
(237)
(314,824)
(625,271)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
644,235
515
47,097
691,847
Additions
2,907
9,460
12,367
Disposals/write-offs
(753)
(9)
(762)
Reclassification to "Other Assets"
(3,302)
(3,302)
Reclassification from "Leased equipment" to "Equipment"
(467)
467
Depreciation charge for the period
(8,496)
(44)
(7,311)
(15,851)
Net book value 30.6.2016
634,591
4
49,704
684,299
Balance 30.6.2016
Cost
951,003
8
367,818
1,318,829
Accumulated depreciation and impairment losses
(316,413)
(4)
(318,114)
(634,531)
During the current period there was no significant variation in property, plant and equipment.
The carrying amount of owned land and buildings included in the above balances amounts to 608,027 as at 30.6.2016 (31.12.2015: 614,844).
In 2015, an impairment loss of 1,061 was recognized in caption "Other Expenses".
13. Goodwill and other intangible assets
Software
Banking rights
Other
Total
Balance 1.1.2015
Cost
385,793
1,785
115,342
502,920
Accumulated amortization and impairment losses
(221,775)
(1,785)
(18,009)
(241,569)
1.1.2015 - 30.6.2015
Net book value 1.1.2015
164,018
97,333
261,351
Reclassification of assets of discontinued operations to "Assets held for sale"
(3,352)
(3,352)
Additions
22,586
22,586
Additions from discontinued operations
74
74
Additions from the acquisition of Diners
22,995
22,995
Amortization for the period from discontinued operations
(153)
(153)
Amortization for the period from continuing operations
(7,799)
(10,113)
(17,912)
Net book value 30.6.2015
175,374
-
110,215
285,589
Balance 30.6.2015
Cost
401,708
1,785
138,267
541,760
Accumulated amortization and impairment losses
(226,334)
(1,785)
(28,052)
(256,171)
1.7.2015 - 31.12.2015
Net book value 1.1.2015
175,374
110,215
285,589
Additions
34,439
72
34,511
Amortization for the period from continuing operations
(8,790)
(11,489)
(20,279)
Net book value 31.12.2015
201,023
-
98,798
299,821
Balance 31.12.2015
Cost
441,920
1,785
138,339
582,044
Accumulated amortization and impairment losses
(240,897)
(1,785)
(39,541)
(282,223)
1.1.2016 - 30.6.2016
Net book value 1.1.2016
201,023
98,798
299,821
Additions
41,484
41,484
Amortization for the period
(10,096)
(9,146)
(19,242)
Net book value 30.6.2016
232,411
-
89,652
322,063
Balance 30.6.2016
Cost
483,404
1,785
138,339
623,528
Accumulated amortization and impairment losses
(250,993)
(1,785)
(48,687)
(301,465)
The additions of the first semester of 2016 mainly concern acquisitions of user rights for computer applications.
The amount reported as "Additions from the acquisition of Diners" in the first semester of 2015 relates to the recognition of an intangible asset regarding the customer relationships from the acquired operation of credit cards, whose useful life was estimated at 7 years.
Liabilities
14. Due to Banks
30.6.2016
31.12.2015
Deposits:
- Current accounts
74,597
126,267
- Term deposits:
Central Banks
22,671,358
24,404,828
Other credit institutions
134,207
62,821
Cash collateral for derivative margin account
28,703
56,960
Sale of repurchase agreements (Repos)
665,802
269,292
Borrowing funds
249,558
250,469
Total
23,824,225
25,170,637
Eurosystem funding decreased by 1.7 billion during the first semester of 2016 mainly due to the sale of EFSF bonds through the PSPP programme (note 9) and new repurchase agreements (Repos).
In June 2016, the European Central Bank carried out a new program of targeted long term refinancing operations (TLTRO-II) with a four year duration. The Bank participates in the above program with an amount of 1 billion.
15. Debt securities in issue and other borrowed funds
i. Issues quaranteed by the Greek State (Law 3723/2008)
Under the programme for the enhancement of the Greek's economy's liquidity, according to Law 3723/2008, the first semester of 2016 the Bank proceeded to the issuance of senior debt securities guaranteed by the Greek State amounted to 5.15 billion while the maturities/redemptions for the same period amounted to 9.22 billion.
The total balance of senior debt securities guaranteed by the Greek State as at 30.6.2016 amounts to 5.15 billion (31.12.2015: 9.22 billion).
These securities are not included in the "Debt securities in issue and other borrowed funds", as they are held by the Bank.
ii. Covered bonds (1)
Covered bonds are not included in caption "Debt securities in issue and other borrowed funds" as these securities are held by the Bank.
The total balance of covered bonds as at 30.6.2016 amounts to 5 million.
iii. Senior debt securities
Balance 1.1.2016
29,742
Changes for the period 1.1 - 30.6.2016
Maturities/Repayments
(2,873)
Fair value change
38
Accrued interest
(7)
Foreign exchange differences
(81)
Balance 30.6.2016
26,819
On 23.5.2016 an early redemption of senior debt security with a nominal value of USD 3 million took place.
(1) Financial disclosures regarding covered bond issues, as determined by the 2620/28.08.2009 Act of the Bank of Greece have been published on the Bank's website.
iv. Liabilities from the securitization of shipping loans
Balance 1.1.2016
310,268
Changes for the period 1.1 - 30.6.2016
Maturities/Repayments
(44,438)
Accrued interest
4,441
Foreign exchange differences
(15,083)
Balance 30.6.2016
255,188
The Bank proceeded to a shipping loan securitization transaction, transferring them to the fully consolidated Special Purpose Entity, Alpha Shipping Finance Ltd, which in turn raised funding from third parties. The liability to the special purpose entity on 30.6.2016 which relates with the securitized shipping loans amounts to 255.2 million.
v. Liabilities from the securitization of other loans
Additional liabilities arising from the securitisation of consumer loans, corporate loans and credit cards are not included in "Debt securities in issue and other borrowed funds" since these securities of nominal value 3.7 billion have been issued by special purpose entities and are held by the Bank.
vi. Subordinated debt
Balance 1.1.2016
26,382
Changes for the period 1.1 - 30.6.2016
Accrued interest
(8)
Balance 30.6.2016
26,374
vii. Hybrid securities
Balance 1.1.2016
15,239
Changes for the period 1.1 - 30.6.2016
Accrued interest
34
Balance 30.6.2016
15,273
viii. Convertible bond loan
Balance 1.1.2016
24,600
Changes for the period 1.1 - 30.6.2016
Fair value change
(9,300)
Balance 30.6.2016
15,300
The convertible bond concerns to bond issuance with nominal value 150 million issued by the Bank on 1.2.2013 under an agreement with Credit Agricole SA for the acquisition of former Emporiki Bank. The valuation of the liability from the convertible bond was recognized in "Gains less losses on financial transactions" and amounted to 9.3 million gain.
Total of debt securities in issue and other borrowed funds, not held by the Bank, as at 30.6.2015
338,954
16. Employee defined benefit obligations
The decrease of defined benefit obligations by 20.9 million compared to 31.12.2015 relates mainly to the partial payment of a recognized liability to the Employees Supplementary Funds (TAP) of former Alpha Credit Bank. More specifically, on 20.5.2016 the General Meeting of the representatives of TAP's members decided the liquidation of TAP under the terms of the agreement signed on 21.4.2016 between the Bank, the Staff Association and TAP. Within this context the Bank paid in the second quarter of 2016 an amount of 24 million to TAP and the relevant liability amounts to 4.8 million against 27.4 million as at 31.12.2015. The final settlement of the liability is estimated that will take place during the current year.
17. Provisions
Balance 1.1.2015
333,520
Changes for the period 1.1 - 30.6.2015
Other provisions from continuing operations
1,016
Other provisions from discontinued operations
26
Other provisions used from continuing operations
(4,624)
Other provisions used from discontinued operations
(186)
Provisions to cover credit risk relating to off-balance sheet items from continuing operations (note 5)
4,725
Provisions to cover credit risk relating to off-balance sheet items from discontinued operations
3
Reclassification of provisions from Bulgaria Branch to "Liabilities related to assets held for sale"
(623)
Balance 30.6.2015
333,857
Changes for the period 1.7 - 31.12.2015
Other provisions from continuing operations
6,209
Reversal of other provisions
(6,048)
Other provisions used from continuing operations
(2,033)
Provision for Voluntary Separation Scheme
64,300
Provisions to cover credit risk relating to off-balance sheet items from continuing operations
14,161
Balance 31.12.2015
410,446
Changes for the period 1.1 - 30.6.2016
Other provisions
2,620
Other provisions used during the period
(3,094)
Provisions to cover credit risk relating to off-balance sheet items (note 5)
3,210
Balance 30.6.2016
413,182
The amounts of other provisions charged to the profit and loss account are included in "Other Expenses" of the income statement.
On 30.6.2016 the balance of provisions to cover credit risk relating to off-balance sheet items amounts to 298.2 million (31.12.2015: 295 million) and other provisions to 114.9 million (31.12.2015: 115.4 million) out of which 24.7 million (31.12.2015: 26.8 million) relates to pending legal cases and an amount of 64.3 million relates to provision of voluntary separation scheme.
Equity
18. Share capital and Retained earnings
a.Share capital
On 30.6.2016 the Bank's share capital amounts to 461,064,360, divided to 1,536,881,200 shares, out of which:
a) 1,367,706,054 common, registered, voting, non-paper shares of nominal value 0.30 each
b) 169,175,146 common, registered, voting, pursuant to restrictions of the article 7a of Law 3864/2010, non paper shares owned by the Hellenic Financial Stability Fund of nominal value 0.30 each.
b. Retained earnings
Since in 2015 there were no distributable profits, in accordance with article 44a of Codified Law 2190/1920, the Ordinary General Meeting of Shareholders on 30.6.2016 decided the non-distribution of dividends to ordinary shareholders of the Bank.
Additional Information
19. Contingent liabilities and commitments
a. Legal issues
The Bank, in the ordinary course of business, is defendant in claims from customers and other legal proceedings. According to the estimations of the legal department, the ultimate settlement of these matters is not expected to have a material effect on the financial position or the operations of the Bank.
The Bank on 30.6.2016 has recorded a provision for pending legal cases amounting to 24.7 million (31.12.2015:
26.8 million) which is included in the caption "Provisions" in Balance Sheet.
b. Tax issues
Alpha Bank has been audited by the tax authorities for the years up to and including 2009. For the years 2011 up to 2014 it has obtained a tax certificate with no qualifications whereas for year 2015 is expected to obtain a tax certificate without any qualifications. Former Emporiki Bank has been audited by the tax authorities for the years up to and including 2008. For the years 2011 up to 2013 it has obtained a tax certificate with no qualifications.
The Bank's branches in London and Bulgaria have been audited by the tax authorities for the years 2013 and 2015 respectively. Former Emporiki Bank's Cyprus branch has not been audited by the tax authorities since the commencement of its operations (year 2011), until its deletion from Department of Registrar of Companies of Cyprus (August 2015), meanwhile it has ceased its operations since September 2014.
On 2.6.2015, the merger via absorption of Diners Club of Greece A.E.P.P was completed. The Company has been audited by the tax authorities for the years up to and including 2010. For the years 2011 up to 2013 it has obtained a tax certificate with no qualifications.
Additional taxes and penalties may be imposed for the unaudited years due to the fact that some expenses may not be recognized as deductible by the tax authorities.
c. Operating leases
The Bank as lessee
The Bank has various obligations with respect to leases of buildings which are used as branches or for administrative purposes.
The duration of the lease agreements is initially for twelve years with a renewal or extension option according to the lease agreements. The policy of the Bank is to renew these contracts.
The minimum future lease payments are:
30.6.2016
31.12.2015
Less than one year
31,144
32,553
Between one and five years
81,116
84,840
Over than five years
84,777
86,496
Total
197,037
203,889
The total lease expenses, for the first semester of 2016, relating to rental of buildings amounted to 15,875 (first semester of 2015: 16,734) and are included in "General administrative expenses".
The Bank as a lessor
The Bank's receivables from leases relate to leases from buildings either to group companies or third parties.
The minimum future lease revenues are:
30.6.2016
31.12.2015
Less than one year
3,514
3,394
Between one and five years
8,028
7,770
Over than five years
7,030
6,717
Total
18,572
17,881
The lease revenues for the first semester of 2016 amounted to 1,708 (first semester of 2015: 1,665) and are included in "Other income".
d. Off balance sheet liabilities
The Bank pursuant to its normal operations, is bound by contractual commitments, that in the future may result to changes in its asset structure. These commitments are monitored in off balance sheet accounts and relate to letters of credit, letters of guarantee, undrawn credit facilities and credit limits, as well as guarantees provided for bonds issued by subsidiaries and other guarantees to subsidiaries.
In addition, contingent liabilities for the Bank arise from undrawn loan commitments and credit limits that may not be fulfilled immediately or may be partly fulfilled as long as the agreed upon requirements are fulfilled by counterparties.
The outstanding balances are as follows:
30.6.2016
31.12.2015
Letters of credit
20,787
21,938
Letters of guarantee and other guarantees
4,245,032
4,525,710
Guarantees relating to bonds issued by subsidiaries of the Bank
15,542
15,542
Letters of credit are used to facilitate trading activities and relate to the financing of contractual agreements for the transfer of goods domestically or abroad, by undertaking the direct payment on behalf of the third party bound by the agreement on behalf of the Bank's client. Letters of credit, as well as letters of guarantee, are commitments under specific terms and are issued by the Bank for the purpose of ensuring that its clients will fulfill the terms of their contractual obligations.
The liability from limits that can not be recalled (committed) in case where counterparties fail to meet their contractual obligations as at 30.6.2016 amounts to 354.8 million (31.12.2015: 211.2 million) and are included in the calculation of risk weighted assets.
e. Assets pledged
Assets pledged, as at 30.6.2016 are analyzed as follows:
Deposits pledged amounting to 0.3 billion concerning the Bank's obligation to maintain deposits in the Bank of Greece, corresponding to 1% of total customer deposits.
Deposits pledged amounting to 0.2 billion concerning guarantees provided on behalf of the Greek State.
Deposits pledged to credit institutions amounting to 1.3 billion which have been provided as guarantee for derivative transactions.
Deposits pledged to credit institutions amounting to 0.06 billion, were given as letters of credit or letters of guarantee issued by the Bank in order to facilitate clients' imports.
Deposits of 3 million were pledged to the Resolution Fund as irrevocable payment commitment for a part of 2016 contribution. The commitment has to be fully secured by cash as decided by the Single Resolution Board.
Due from banks:
i. amount of 0.8 billion pledged to central banks for liquidity purposes.
ii. amount of 0.35 billion given to foreign subsidiaries as collateral for credit risk.
Loans and advances to customers:
i. amount of nominal value of 22.8 billion pledged to Central Banks for liquidity purposes.
ii. a carrying amount of 2.8 billion, which relates to corporate, consumer loans and credit cards, has been securitized for the issuance of Special Purpose Entities' bonds of a nominal value of 3.7 billion, which are held by the Bank and pledged to Central Banks for liquidity purposes.
iii. a carrying amount of 0.6 billion, which relates to shipping loans, has been securitized for the issuance of securities for the purpose of financing the Bank through a Special Purpose Entitiy, which amounts to 0.3 billion at 30.6.2016.
iv. an amount of nominal value of 0.1 billion has been pledged for other loan facilities.
Securities held for trading and investment securities portfolio:
i. an amount of nominal value of 3.54 billion of Greek government securities, out of which a nominal amount of 3.5 billion has been pledged to central banks for liquidity purposes, and a nominal amount of 0.04 billion has been pledged for other loan facilities.
ii. an amount of nominal value of 3.65 billion relates to securities issued by the European Financial Stability Facility (EFSF), received from the Bank by the HFSF in the context of: a) its participation to the share capital increase that was completed on 6.6.2013, and, b) due to the coverage of the difference between the values of assets and liabilities transferred from Cooperative Banks, out of which an amount of 3.39 billion is pledged as collateral to Central Banks for participation in main refinancing operations and an amount of 0.26 billion has been given as collateral for other loan facilities.
iii. An amount of nominal value of 0.5 billion relates to bonds issued from the securitization of receivables of finance leases of a Group's entity, has been pledged to Central Banks in order for the Bank to participate in main refinancing operations.
iv. An amount of 0.4 billion of other corporate securities has been given as a collateral for repo agreements.
In addition an amount of nominal value of 5.2 billion that relates to securities issued under the guarantee of the Greek State in accordance with Law 3723/2008 and are held by the Bank, has been pledged by a) an amount of 5 billion as collateral to Central Banks for liquidity purposes and b) an amount of 0.2 billion has been given as collateral for other loan facilities.
20. Operating segments
(Amounts in million of Euro)
1.1 - 30.6.2016
Retail Banking
Corporate
Banking
Asset Management/Insurance
Investment Banking/ Treasury
South Eastern Europe
Other
Total
Net interest income
504.4
341.6
0.9
(33.9)
10.3
823.3
Net fee and commission income
53.9
63.1
12.6
2.2
131.8
Other income
3.3
2.2
0.5
20.1
103.6
129.7
Total income
561.6
406.9
14.0
(11.6)
-
113.9
1,084.8
Total expenses
(329.9)
(63.1)
(7.3)
(8.2)
-
(26.3)
(434.8)
Impairment losses
(166.0)
(354.7)
(520.7)
Profit/(losses) before income tax
65.7
(10.9)
6.7
(19.8)
-
87.6
129.3
Income tax
(4.7)
Profit / (losses) after income tax from continuing operations
124.6
Profit/(losses) after income tax from discontinued operations
0.2
0.2
Net profit/(losses) after income tax
124.8
Assets 30.6.2016
24,763.7
18,039.9
126.0
13,366.0
7,035.8
63,331.4
Liabilities 30.6.2016
22,322.4
5,990.2
599.5
25,865.0
94.1
54,871.2
(Amounts in million of Euro)
1.1 - 30.6.2015
Retail Banking
Corporate
Banking
Asset Management/Insurance
Investment Banking/ Treasury
South Eastern Europe
Other
Total
Net interest income
484.6
346.9
2.4
(49.9)
0.4
784.4
Net fee and commission income
53.2
61.0
23.0
(6.3)
130.9
Other income
2.7
3.6
0.7
39.4
(66.3)
(19.9)
Total income
540.5
411.5
26.1
(16.8)
-
(65.9)
895.4
Total expenses
(328.2)
(60.4)
(8.7)
(8.4)
-
(15.6)
(421.3)
Impairment losses
(1,068.0)
(898.7)
(1,966.7)
Negative goodwill from acquisitions
48.2
48.2
Profit/(losses) before income tax
(855.7)
(547.6)
17.4
(25.2)
-
(33.3)
(1,444.4)
Income tax
335.8
Profit / (Losses) after income tax from continuing operations
(1,108.6)
Profit/( losses) after income tax from discontinued operations
(89.3)
(89.3)
Profit/( losses) after income tax
(1,197.9)
Assets 31.12.2015
24,753.6
19,187.6
63.6
13,421.4
444.6
7,122.2
64,993.0
Liabilities 31.12.2015
22,575.7
5,818.7
522.2
27,070.1
338.8
249.4
56,574.9
i. Retail Banking
Includes all individuals (retail banking customers), professionals, small and very small companies except for those whose relationship management is performed by branches abroad (South Eastern Europe).
The Bank, through its extended branch network, offers all types of deposit products (deposits/ savings accounts, working capital/ current accounts, investment facilities/ term deposits, Repos, Swaps), loan facilities (mortgages, consumer, corporate loans, letters of guarantee) and debit and credit cards of the above customers.
ii. Corporate Banking
Includes all medium-sized and large companies, multinational companies, corporations managed by the Corporate Banking Division and shipping companies. The Bank offers working capital facilities, corporate loans, and letters of guarantee of the abovementioned corporations.
iii. Asset Management/Insurance
Consists of a wide range of asset management services
offered through the Bank's private banking units. Additionally, a wide range of insurance products to individuals and companies is provided.iv. Investment Banking/Treasury
Includes stock exchange, advisory and brokerage services relating to capital markets, and also investment banking facilities, offered by the Bank. It also includes the activities of the Dealing Room in the interbank market (FX Swaps, Bonds, Futures, IRS, Interbank placements - Loans etc.).
v. South Eastern Europe
The Bank's branch in Bulgaria, included in this segment, is presented in caption "Profit/(losses) from discontinued operations".
vi. Other
This segment consists of administration departments of the Bank and income and expenses that are not related to its operating activities or are non recurring and are due to external factors.
21. Exposure in credit risk from debt issued by the peripheral Eurozone countries
Due to the prolonged turmoil in the Eurozone countries, and the issues which the Greek economy faces, concerning the service of public debt, the Bank monitors the credit risk from its exposure to the Greek State as well as the remaining peripheral Eurozone countries.
i. Exposure to the Greek State
The table below presents the Bank's total exposure in Greek Government securities:
30.6.2016
31.12.2015
Portofolio
Nominal value
Carrying amount
Nominal value
Carrying amount
Available for sale
4,289,577
3,595,503
4,537,722
3,831,479
Trading
1,790
1,234
2,783
1,888
Total
4,291,367
3,596,737
4,540,505
3,833,367
All Greek Government securities are classified in Level 1 based on the quality of inputs used for the estimation of their fair value.
In addition the public entities securities on 30.6.2016 amounted to 150.6 million (31.12.2015: 150.7 million.).
The Bank's exposure to Greek State credit risk from other financial instruments, excluding securities and loans and advances is depicted in the table below:
On balance sheet exposure
30.6.2016
31.12.2015
Carrying amount
Carrying amount
Derivative financial instruments - assets
420,151
362,700
Derivative financial instruments - liabilities
(164,984)
(271,711)
Derivative financial assets from public sector entities amounted to 6.5 million on 30.6.2016 (31.12.2015: 16.6 million liabilities).
The Bank's exposure in loans granted to public sector entities/organizations on 30.6.2016 amounted to 1,309 million (31.12.2015: 1,297.6 million). The Bank for the above receivables has recognized impairment amounted to 43.4 million as at 30.6.2016 (31.12.2015: 42.1 million).
In addition the balance of Bank's loans guaranteed by the Greek State (directly guaranteed by Greek government, loans guaranteed by TEMPE, loans guaranteed by Common Ministerial Decisions) on 30.6.2016 amounted to 749.3 million (31.12.2015: 764 million). For these loans the Bank has recognized impairment amounted to 149 million as at 30.6.2016 (31.12.2015: 144.3 million).
ii. Exposure to other peripheral Eurozone countries debt
The Bank as at 30.6.2016 had no exposure to bonds issued by Cyprus, Italy, Portugal and Ireland.
22. Disclosures relevant to the fair value of financial instruments
Fair value of financial instruments measured at amortized cost
30.6.2016
31.12.2015
Fair
valueCarrying amount
Fair
valueCarrying amount
Assets
Loans and advances to customers
40,900,548
40,988,044
41,493,462
41,558,014
Investment securities
- Held to maturity
9,018
9,379
2,561
2,823
- Loans and receivables
3,761,683
3,683,411
4,364,715
4,289,482
Liabilities
Due to customers
27,669,491
27,689,554
27,724,167
27,733,679
Debt securities in issue (1)
282,155
323,654
332,014
381,631
The table above presents the fair value and the carrying amount of financial instruments which are measured at amortized cost.
The fair value of loans is estimated based on the interbank market yield curves by adding a liquidity premium and spread per loan category and business unit for the expected loss. The fair value of deposits is estimated based on the interbank market yield curves by deducting customer's spread depending on the type of deposit. In both of these cases, the future cash flows (floating rate) are calculated based on the implied forward rates until their maturity.
The fair value of held to maturity securities and debt securities in issue is calculated using market prices, as long as the market is active. In all other cases as well as for the loans and receivables portfolio the discounted cash flows method is used and all significant variables are based either on observable market data or on a combination of observable and unobservable market data.
The fair value of other financial assets and liabilities which are recorded at amortized cost does not differ materially from the respective carrying amount.
Hierarchy of financial instruments measured at fair value
30.6.2016
Level 1
Level 2
Level 3
Total Fair value
Derivative financial assets
4,616
830,349
6,913
841,878
Securities held for trading
- Bonds and treasury bills
1,234
1,234
Available for sale securities
- Bonds and treasury bills
3,853,712
654,492
39,342
4,547,546
- Shares
32,598
13,168
13,387
59,153
- Other variable yield securities
6,047
6,047
Derivative financial liabilities
1,672,404
1,571
1,673,975
Convertible bond
15,300
15,300
31.12.2015
Level 1
Level 2
Level 3
Total Fair value
Derivative financial assets
6,661
784,280
3,530
794,471
Securities held for trading
- Bonds and treasury bills
1,888
1,888
Available for sale securities
- Bonds and treasury bills
4,086,826
651,470
19,460
4,757,756
- Shares
113,142
12,803
125,945
- Other variable yield securities
7,190
7,190
Derivative financial liabilities
1,556,555
1,556,555
Convertible bond
24,600
24,600
(1) Debt securities in issue do not include the convertible bond loan issued by the Bank in the context of the agreement with Credit Agricole S.A. regarding the acquisition of Emporiki Bank since this security is measured at fair value.
The tables above present the fair value of financial instruments which are measured at fair value in hierarchy levels based on inputs used for the fair value measurement. Securities traded in an active market and exchange-traded derivatives are classified as Level 1.
The available for sale securities whose fair value is calculated based on non-binding market prices provided by dealers-brokers or on the application of the income approach methodology using interest rates and credit spreads which are observable in the market, are classified as Level 2. Level 3 classification includes securities whose fair value is estimated using significant unobservable inputs.
The fair value of non listed shares, as well as shares not traded in an active market is determined based on the estimations made by the Bank which relate to the future profitability of the issuer after taking into account the expected growth rate of its operations, as well as the weighted average rate of capital return which is used as a discount rate. Given that the above parameters are mainly non observable, the valuation of these shares is classified as Level 3.
On 30.6.2016 the Bank classified in the available for sale securities portfolio the preference shares of Visa Inc. which the Bank received through the acquisition of Visa Europe by Visa Inc. (note 3). In order to determine their fair value the Bank used the conversion rate into ordinary shares and the current stock price of the ordinary share by taking into consideration the sale restrictions. The abovementioned shares were classified as level 2 securities, as the non-observable inputs used are insignificant in the calculation of the final fair value.
For the valuation of over the counter derivatives income approach methodologies are used: discounted cash flow models, option-pricing models or other widely accepted valuation models. Valuations are checked on a daily basis with the respective prices of the counterparty banks in the context of the daily process of provision of collaterals and settlement of derivatives. If the non-observable inputs are significant, the fair value that arises is classified into Level 3 or otherwise in Level 2.
Finally, the valuation of the convertible bond loan was based on the estimated share price at the maturity date of the bond, as reflected in the Bank's business plan, which is unobservable market parameter.
The Bank recognizes the transfer between fair value hierarchy Levels at the end of each quarter.
Within the period, corporate bond of 229.4 million were transferred from Level 2 to Level 1 due to the satisfaction of the criteria of active market. In addition, within the period, 233.3 million of Greek corporate bonds were transferred from Level 1 to Level 2, as the liquidity margin (bid-ask spread) moved above the limit set for the characterization of market as active.
The table below presents the valuation methods used for the measurement of Level 3 fair value:
30.6.2016
Total Fair Value
Fair Value
Valuation Method
Significant non-observable inputs
Derivative Financial Assets
6,913
6,689
Discounted cash flows with interest rates, taking into account the credit risk of the counterparty
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
224
Discounted cash flows with interest rates
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Available for sale bonds
39,342
39,342
Based on issuer price / Adjusted market prices due to low trading / Discounted cash flows estimating credit risk
Price / Adjusted price / Credit spread
Available for sale shares
13,387
13,387
Discounted cash flows / Multiples valuation method / Net assets method / Cost of acquisition
Future profitability of the issuer
Derivative Financial Liabilities
1,571
1
Discounted cash flows with interest rates
Valuation of reserve adequacy for payment of hybrid securities' dividends
1,570
Discounted cash flows with interest rates taking into account the credit risk
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
Convertible bond loan
15,300
15,300
Discounted cash flows / Multiples valuation method
Future profitability of the issuer
31.12.2015
Total Fair Value
Fair Value
Valuation Method
Significant non-observable inputs
Derivative Financial Assets
3,530
3,185
Discounted cash flows with interest rates, taking into account the credit risk of the counterparty
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
345
Discounted cash flows with interest rates
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Available for sale bonds
19,460
19,460
Based on issuer price
Price
Available for sale shares
12,803
12,803
Discounted cash flows / Multiples valuation method / Cost of acquisition
Future profitability of the issuer
Convertible bond loan
24,600
24,600
Discounted cash flows / Multiples valuation method
Future profitability of the issuer
A reconciliation of the movement of financial instruments measured at fair value in Level 3 is depicted below.
30.6.2016
Assets
Liabilities
Available for sale securities
Derivative Financial Assets
Derivative Financial Liabilities
Convertible
Bond Loan
Opening balance 1.1.2016
32,263
3,530
(24,600)
Total gain or loss recognized in the income statement
(131)
(112)
(1)
9,300
Total gain or loss recognized directly in equity
3,086
Purchases/issues
335
Sales/repayments/settlements
(773)
(177)
Transfers to Level 3 from Level 2
17,949
3,672
(1,570)
Balance 30.6.2016
52,729
6,913
(1,571)
(15,300)
Amounts included in the income statement and relate to financial instruments included in the balance sheet at the end of the reporting period
(131)
(112)
1
9,300
Within the period, a subordinated security of 17.9 million was transferred from Level 2 to Level 3, for which market prices adjusted due to the low volume of transactions. In addition, 3.7 million of derivative financial Assets and 1.6 million of derivative financial Liabilities were transferred from Level 2 to Level 3, since the use of non-observable inputs was significant.
31.12.2015
Assets
Liabilities
Available for sale securities
Derivative Financial Assets
Derivative Financial Liabilities
Convertible
Bond Loan
Opening balance 1.1.2015
34,756
39
(5,432)
-
Total gain or loss recognized in the income statement
(738)
811
5,360
Total gain or loss recognized directly in equity
(1,248)
Purchases/issues
7,622
Sales/repayments/settlements
(8,186)
20
Transfers to Level 3 from Level 2
3,034
Balance 30.06.2015
32,206
3,884
(52)
-
Changes for the period 1.7 - 31.12.2015
Total gain or loss recognized in the income statement
(6,290)
1,716
52
Total gain or loss recognized directly in equity
1,598
Purchases/issues
5,000
Sales/repayments/settlements
(262)
Transfers to Level 3 from Level 2
11
(2,070)
(24,600)
Balance 31.12.2015
32,263
3,530
-
(24,600)
Amounts included in the income statement and relate to financial instruments included in the balance sheet at the end of the reporting period 1.1 - 30.6.2015
(861)
(1,169)
(52)
During 2015, corporate bonds amounting to 11.6 million as well as other securities amounting to 1 million that were classified in Level 3, were purchased since non observable parameters were used for valuation purposes.
In addition, sales-repayments of foreign corporate bonds amounting to 7.9 million and other securities amounting to 0.5 million took place.
Regarding derivative financial assets, a transfer from Level 2 to Level 3 occurred since the use of non-observable inputs was significant.
Finally within 2015 the convertible bond loan was transferred from Level 2 to Level 3 as a different valuation method was applied.
Sensitivity analysis for Level 3 financial instruments that its valuation was based on non observable data is presenting in the following table:
Significant
non-observable inputsSignificant
non-observable
inputs changeTotal effect in Income Statement
Total effect
in Equity
Favourable Variation
Unfavourable Variation
Favourable Variation
Unfavourable Variation
Derivative Financial Assets
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
Increase the probability of default through reduction of internal ratings by 2 grades / Increase the loss given default by 10%
(752)
(752)
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Increase the probability of dividend payments to 100%
(223)
(223)
Available for sale bonds
Issuer price / Adjustment due to low trading / Credit spread
Variation +/-10%
859
(836)
Available for sale shares
Future profitability of the Issuer
Variation +/- 10% in P/B and EV/Sales ratios (multiples valuation method)
(163)
568
(568)
Derivative Financial Liabilities
Assessment of the adequacy of reserves for the payment of hybrid securities dividends
Increase the probability of dividend payments to 100%
1
1
The probability of default and the loss given default of the counterparty (BCVA adjustment) are calculated with the use of an internal model
The BCVA adjustment is calculated on the net exposure per counterparty and is allocated to derivative financial assets
Convertible bond Loan
Future profitability of the Issuer
Alpha Bank share price in the range of 1.5-2.5
5,073
(1,745)
5,073
(1,745)
Total
5,074
(2,883)
6,501
(4,124)
23. Capital adequacy
The Bank's policy is to maintain a robust capital base to safeguard the Bank's development and retain the trust of depositors, shareholders, markets and business partners.
Share capital increases are performed after Shareholders' General Meeting or Board of Directors' decisions in accordance with the articles of association or the relevant laws.
Treasury shares are allowed to be purchased based on the terms and conditions of law.
The capital adequacy is supervised by Single Supervising Mechanism of ECB, to which reports are submitted on a quarterly basis. The minimum requirements regarding Tier I ratio and the capital adequacy ratio of the Bank are stipulated by Bank of Greece Governor's Acts.
Capital adequacy ratio compares regulatory capital with the risks assumed by the Bank (risk-weighted assets). Regulatory capital includes Tier I capital (share capital, reserves and non-controlling interests), additional Tier I capital (hybrid securities) and Tier II capital (subordinated debt). Risk-weighted assets include the credit risk of the investment portfolio, the market risk of the trading portfolio and operational risk.
Since January 1, 2014 EU Directive 2013/36/EU dated 26 June 2013 incorporated into Law 4261/2014 along with the EU Regulation 575/2013/EU, dated 26 June 2013 "CRD IV" came into force which gradually introduce the new capital adequacy framework (Basel III) for credit institutions.
According to the above regulatory framework, for the calculation of capital adequacy ratio the effective transitional arrangements are followed.
Moreover:
besides the 8% Capital Adequacy Limit, there are limits of 4.5% for Common Equity ratio and 6% for Tier I ratio, and
is required the maintenance of capital buffers additional to the Common Equity Capital, from 01.01.2016 and gradually until 31.12.2019.
In particular:
from 1.1.2016 a capital buffer of 0.625% exists which will gradually rise to 2.5% on 31.12.2019.
The Bank of Greece through the acts issued by the Executive Committee settled the following capital buffers:
- Countercyclical capital buffer rate for the first nine months of 2016, "zero percent" (Act 55/18.12.2015, 83/18.03.2016 & 97/16.6.2016).
- Other systemically important institutions (O-SII) buffer for 2016 "zero percent" (Act 56/18.12.2015).
These limits should be met both on a standalone and on a consolidated basis.
30.6.2016
(estimate)31.12.2015
Common Equity Tier I
17.3%
17.0%
Tier I
17.3%
17.0%
Capital adequacy ratio
17.3%
17.1%
24. Related - party transactions
The Bank enters into a number of transactions with related parties in the normal course of business. These transactions are performed at arms length and are approved by the Bank's committees.
a. The outstanding balances of the Bank's transactions with key management personnel consisting of members of the Bank's Board of Directors and Executive Committee, their close family members and the entities controlled by them, as well as, the results related to these transactions are as follows:
30.6.2016
31.12.2015
Assets
Loans and advances to customers
10,001
11,460
Liabilities
Due to customers
14,049
13,418
Employee defined benefit obligations
221
453
Total
14,270
13,871
Letters of guarantee and approved limits
10,931
11,689
From 1 January to
30.6.2016
30.6.2015
Income
Interest and similar income
50
138
Fee and commission income
67
69
Total
117
207
Expenses
Interest expense and similar charges
28
132
Fees paid to key management and close family members
1,753
1,691
Total
1,781
1,823
b. The outstanding balances with the Bank's subsidiaries, joint ventures and associates as well as the results related to these transactions are as follows:
i. Subsidiaries
30.6.2016
31.12.2015
Assets
Due from banks
1,622,107
1,959,026
Derivative financial assets
2,723
1,462
Loans and advances to customers
3,204,382
3,184,277
Available for sale securities
335,068
302,442
Other assets
72,776
2,690
Total
5,237,056
5,449,897
Liabilities
Due to banks
440,263
67,650
Due to customers
1,060,912
1,027,650
Derivative financial liabilities
14,687
6,077
Debt securities in issue and other borrowed funds
272,803
328,039
Other liabilities
5,688
58,108
Total
1,794,353
1,487,524
Letters of guarantee and other guarantees
795,351
773,629
In addition to the financing of the Bank's subsidiaries companies, guarantees have been given from the Bank for bonds issued by subsidiaries amounted to 15,542 on 30.6.2016 (31.12.2015: 15,542).
From 1 January to
30.6.2016
30.6.2015
Income
Interest and similar income
34,777
52,065
Fee and commission income
6,743
8,225
Dividend income
75,307
Gains less losses on financial transactions
1,096
Other income
1,955
1,905
Total
119,878
62,195
Expenses
Interest expense and similar charges
10,831
47,703
Commission expense
1,289
1,149
Gains less losses on financial transactions
30,639
General administrative expenses
6,604
7,630
Total
18,724
87,121
ii. Joint ventures
30.6.2016
31.12.2015
Assets
Loans and advances to customers
154,660
158,665
Other assets
4
Total
154,664
158,665
Liabilities
Due to customers
21,016
21,257
From 1 January to
30.6.2016
30.6.2015
Income
Interest and similar income
2,851
2,846
Fee and commission income
1
2
Other income
5
9
Total
2,857
2,857
Expenses
Interest expense and similar charges
86
152
iii. Associates
30.6.2016
31.12.2015
Assets
Loans and advances to customers
3,044
3,044
Liabilities
Due to customers
348
201
From 1 January to
30.6.2016
30.6.2015
Income
Interest and similar income
5
5
c. The Employees Supplementary Fund maintains deposits with the Bank amounting to 2,345 (31.12.2015: 4,590). Periods' Interest expense related to deposits amounts to 16. In addition the Supplementary Fund's assets include Alpha Bank's shares of 114 (31.12.2015: 114).
d. The Hellenic Financial Stability Fund (HFSF) exercises significant influence on the Bank. In particular, according to Law 3864/2010 and the Relationship Framework Agreement("RFA") as of 23.11.2015, which replaced the previous of 2013, HFSF has representation in the Board of Directors and in other significant Committees of the Bank. Therefore, according to IAS 24, HFSF and its related entities are considered related parties for the Bank.
The outstanding balances and the results related to these transactions are analyzed as follows:
From 1 January to
30.6.2016
30.6.2015
Income
Fee and commission income
5
34
25. Assets held for sale and discontinued operations
The Bank, under the approved by the European Committee Restructuring Plan (note 39 of the financial statements as of 31.12.2015) and the fulfillment of the relevant commitment relating to the deleveraging of part of the assets of its international activities, proceeded to the sale of the operations of the Bulgaria Branch and Alpha Bank AD Skopje as well as it began the process for the sale of APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE.
Bank's branch in Bulgaria
On 17.7.2015, the Bank and Eurobank, issued a joint statement, announcing their agreement, in main terms, for the transfer of operations of the Bulgaria branch to Eurobank's subsidiary in Bulgaria (PostBank). On 6.11.2015 the Bank and Postbank signed the relevant contract, finalizing the terms of the transfer which include a transfer price of 1 Euro and a partial undertaking of Branch's debt obligations by the buyer. The transfer was completed on 1.3.2016.
From 30.6.2015 the assets of Bulgaria Branch, and its directly related liabilities, met the qualification requirements as "Held for sale" in accordance with IFRS 5, as at that date the management had decided to sell the unit and was already in the process of negotiations with the prospective buyer. In addition, the Bulgaria Branch is considered a separate geographical area of operations for the Bank which is included in the South Eastern Europe for information purposes per operating segment. After the classification of the Bulgarian Branch, which is the only company in the banking sector whereby the Bank operates in Bulgaria, as asset held for sale, its activities are classified as "discontinued operations" by the Bank.
Therefore, on 31.12.2015 for reporting purposes, the Bank valued the assets and liabilities of Bulgaria Branch at the lowest price between the book value and fair value less selling costs recognizing the difference which was amounted to 34,007 as loss in the caption "Profit/(loss) after tax income from discontinued operations" in the Income Statement. It is noted that the valuation difference at fair value is different from the amount of 85,500 that was recognized during the second and the third quarter of 2015, based on the final terms of the sale, as reflected at the contract of 6.11.2015. After the above valuation, the assets of the Branch as at 31.12.2015 amounted to 444,401 and the liabilities of the Branch amounted to 338,820.
Income Statement and Statement of Comprehensive Income
The following table presents the results of the Bulgaria Branch for the period from 1.1.2016 to the disposal date. It is noted that the results and cash flows arising from the Bulgaria Branch are presented as "discontinued operations" in both the Income Statement and the Statement of Cash Flows, with a corresponding restatement of the comparative period 1.1.2015 untill 30.6.2015.
(Amounts in thousands of Euro)
From 1 January to
30.6.2016
30.6.2015
Interest and similar income
3,123
13,613
Interest expense and similar charges
(592)
(4,004)
Net interest income
2,531
9,609
Fee and commission income
841
3,276
Commission expense
(74)
(200)
Net fee and commission income
767
3,076
Gains less losses on financial transactions
64
277
Other income
78
188
142
465
Total income
3,440
13,150
Staff costs
(1,574)
(5,055)
General administrative expenses
(2,581)
(7,958)
Depreciation
(397)
(1,474)
Other expenses
(29)
(18)
Total expenses
(4,581)
(14,505)
Impairment losses and provisions to cover credit risk
1,563
(2,464)
Profit/(Loss) before income tax
422
(3,819)
Income tax
Profit/(loss), after income tax
422
(3,819)
Difference due to valuation at fair value
(85,500)
Loss from the disposal after income tax
(189)
Net profit/(Loss) after income tax from discontinued operations
233
(89,319)
The amount of cash and cash equivalent of the Bulgaria Branch, which was transferred at the disposal, amounted to 9,942.
Investment in subsidiary Alpha Bank AD Skopje
The Bank, during the fourth quarter of 2015, began the process of selling its subsidiary Alpha Bank Skopje (ABS). ABS is the smallest subsidiary of the Group in the Balkans and it has a small presence in the local market in Skopje (market share <2%). As part of this process, investors, which were shortlisted from a broader investor list, were invited to submit their bids for the acquisition of the 100% of the ABS shares and of the 100% of the hybrid instrument (subordinated loan) granted to the ABS by the parent company (both of them consist the "Perimeter Transaction"). The disposal was completed on 10.5.2016 for a total amount of 3.2 million.
On 31.12.2015 the Bank's participation in the subsidiary and the hybrid instrument satisfy the conditions for classification as "held for sale" in accordance with IFRS 5.
Therefore, for the preparation of 31.12.2015 financial statements the participation in the subsidiary company and the hybrid instrument was valued at the lower of book and fair value less cost of sale, recognizing the difference amounted to 28,553 as a loss in gains less losses on financial transactions. The fair value was determined based on the financial bids which were received from the potential investors for the Perimeter of the Transaction and the assessment of the Bank for the final consideration. The final consideration does not differ from the fair value determined.
Investment in companies APE Fixed Assets , APE Commercial Property , APE Investment Property AE
Sale consultants were engaged in June of the current year and the liquidation procedure of the Bank's participations in APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE began. APE Fixed Assets AE is a Bank's subsidiary, while APE Commercial Property AE and APE Investment Property AE are joint ventures, where the control is exercised jointly by the Bank and the other shareholder.
From 30.6.2016 the abovementioned investments meet the requirements to be classified as "held for sale" in accordance with IFRS 5, due to the fact that on that date the Management had decided their sale, had initiated an active programme to find buyer and the sale is expected to be completed within one year.
According to IFRS 5 the assets held for sale or disposal groups are valued at the lower of book and fair value less cost of sale and they are presented in the balance sheet separately from other assets and liabilities. The Bank proceeded to the measurement of the fair value of the participation as well as of loans and receivables from these companies which consist a part of its net investment. From the abovementioned measurement on 30.6.2016 losses amounting to 29.36 million arose due to the fact that the fair value of assets held for sale was lower than the book value and they were recognized in caption Gains less losses on financial transactions in the Income Statement.
In the table below an analysis of the specific assets regarding APE Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE which are presented in the Balance Sheet as assets held for sale, is depicted.
30.6.2016
Loans and advances to customers
47,570
Investments in subsidiaries, associates and joint ventures
69,530
Total assets held for sale
117,100
In addition, the Bank has classified in Assets held for sale, its participation to the companies SELONDA A.E.G.E. and NIREUS A.E.G.E since it intends to transfer these companies in the near future. The fair value of these companies was determined in the amount of 1.
The Bank at each reporting date assesses the actions taken within the context of the implementations of the restructuring plan in order assets and liabilities that are directly associated with them to be classified as held for sale when the criteria of IFRS 5 (which are presented in note 1.16 of the 31.12.2015 financial statements) are met.
26. Merger of Company Diners Club Greece ..P.P.
On 2.6.2015 completed the merger of the Bank and Diners Club through absorption of the second from the first. From the merger a negative goodwill of 48.2 million recognized to Bank's income statement in the first semester of 2015. The terms and accounting treatment are presented on note 43 of the Bank's annual financial statements of 31.12.2015.
27. Corporate events
a. On 26.1.2016 the Bank participated in the establishment of Aktua Hellas Holding SA, which is based in Greece with a participation of 45% and share capital of 25 thousand.
b. On 2.2.2016 the Bank participated in the share capital increase of the joint venture Alpha TANEO AKES with an amount of 51 thousand.
c. On 18.2.2016 the Bank participated in the share capital increase of its subsidiary, Alpha Group Investments Ltd with the amount of 57.82 million.
d. On 1.3.2016 the transfer of Alpha Bank Bulgarian Branch operations in Eurobank Bulgaria AD, a subsidiary of Eurobank Ergasias AE was completed.
e. On 22.4.2016 the Bank participated in the share capital increase of the joint venture Aktua Hellas Holding S.A., with the amount of 45 thousand.
f. On 10.5.2016 the sale of all shares of the Bank's subsidiary, Alpha Bank A.D. Skopje was completed.
g. On 13.5.2016 the Bank participated in the share capital increase of its subsidiary, Alpha Group Investments Ltd with the amount of 11.9 million.
h. On 17.5.2016 Alpha Bank, Eurobank and KKR Credit reached an agreement to assign the management of credit and equity exposures to a selected number of Greek companies into a platform managed by Pillarstone.
28. Restatement of financial statements
During the current period the Bank modified the way of presentation of figures related to the loyalty bonus card program. These figures, which up to now were included in other expenses, other income and commissions are now included as a net amount in commission income. This modification is performed in order to reflect better the substance of the reward program. As a result of this change, some figures of the income statement of the comparative period reformed without changing the result, as presented in the following table:
From 1 January to
31.12.2015
30.6.2015
Net fee and commission income
(535)
(1,421)
Other income
(3,523)
(873)
General administrative expenses
4,058
2,294
Total effect
-
-
1.7 - 31.12.2015
1.1 - 30.6.2015
Net fee and commission income
886
(1,421)
Other income
(2,650)
(873)
General administrative expenses
1,764
2,294
Total effect
-
-
Furthermore, the figures of the comparative period were restated as a result of the finalization of the Bulgaria Branch transfer terms.
Below are restated statements of income and cash flows for the period 1.1 - 30.6.2015:
From 1 January to 30.6.2015
Published amounts
Restatements due to changes in the presentation of figures relating to the loyalty Bonus card program
Restatements due to finalization of the Bulgaria Branch
transfer terms
Restated amounts
Interest and similar income
1,321,497
1,598
1,323,095
Interest expense and similar charges
(538,633)
(538,633)
Net interest income
782,864
1,598
784,462
Fee and commission income
159,597
(800)
158,797
Commission expense
(27,265)
(621)
(27,886)
Net fee and commission income
132,332
(1,421)
130,911
Dividend income
1,123
1,123
Gains less losses on financial transactions
(29,780)
(29,780)
Other income
9,601
(873)
8,728
(19,056)
(873)
(19,929)
Total income
896,140
(2,294)
1,598
895,444
Staff costs
(200,018)
(200,018)
General administrative expenses
(187,826)
2,294
(185,532)
Depreciation and amortization
(34,144)
(34,144)
Other expenses
(1,685)
(1,685)
Total expenses
(423,673)
2,294
(421,379)
Impairment losses and provisions to cover credit risk
(1,964,855)
(1,838)
(1,966,693)
Negative goodwill from acquisitions
48,237
48,237
Profit/(loss) before income tax
(1,444,151)
(240)
(1,444,391)
Income tax
335,829
335,829
Net profit/(loss) after income tax from continuing operations
(1,108,322)
-
(240)
(1,108,562)
Net profit/(loss) after income tax from discontinued operations
(89,559)
240
(89,319)
Net profit/(loss) after income tax
(1,197,881)
-
-
(1,197,881)
29. Events after the balance sheet date
a. On 14.7.2016 the Bank, as a result of relative restructuring agreement of the company Dias Aquaculture SA, acquired additional shares of Selonda Aquacultures AEGE, from the share capital increase, conducted by contribution in kind of all the assets and part of the liabilities of company Dias Aquaculture SA to the company Selonda Aquacultures AEGE. Therefore, after the share capital increase, the Bank's share in the latter changed from 23.01% to 21.97%. The Bank, which identified at zero fair value the shares acquired, intends to dispose all of its shares of Selonda Aquacultures AEGE in the near future.
b. On 22.7.2016 the Bank covered, proportionally to its share, the increase in the share capital of the joint venture Aktua Hellas Holding SA, by paying the amount of 570 thousand.
c. On 2.8.2016, the Bank covered, proportionally to its share, the increase in the share capital of the joint venture Alpha TANEO AKES by paying the amount of 90 thousand.
d. Following the evaluation of the Binding Offers, submitted by investors in the context of a process to acquire the majority stake in the share capital of Ioniki Hotel Enterprises , on 5.8.2016 it was announced by the Group that a consortium comprised of Tourism Enterprises of Messinia S.A. and D-Marine Investments Holding B.V. was selected as the preferred bidder. Alpha Bank has entered into exclusive discussions with the Preferred Bidder for the completion of the Process.
e. On 22.8.2016 the Bank proceeded to the acquisition of 97.27% of the shares of Ioniki Hotel Enterprises A.E. from the related companies Alpha Group Investments Ltd, Ionian Equity Participations Ltd, Ionian Holdings A.E., Oceanos A.T.O.E.E. and Alpha Supporting Services A.E. by 89.77%, 1.87%, 1.87%, 1.87% and 1.87% respectively, in the context of the internal restructuring plan of the portfolio of Group Alpha Bank in order to service the business initiatives and under the agreed terms with the best practices terms which are followed in similar transactions.
Athens, 30 August 2016
THE CHAIRMAN
OF THE BOARD OF DIRECTORSTHE MANAGING DIRECTOR
THE GENERAL MANAGER
AND CHIEF FINANCIAL OFFICERTHE ACCOUNTING
AND TAX MANAGERVASILEIOS T. RAPANOS
ID No 666242
DEMETRIOS P. MANTZOUNIS
ID No 166670
VASILEIOS E. PSALTIS
ID No 666591
MARIANNA D. ANTONIOU
ID No 694507
Appendix
According to European Securities and Markets Authority(ESMA) guidelines in relation to Alternative Performance Measures(APMs) which published in October 2015 and came into force on 3 July 2016 on the following tables are disclosed the definitions and the calculations of the related (APMs) which are included to Board of Directors semi-annual Financial Report.
Definition
Calculation
30.6.2016
31.12.2015
The indicator reflects the relationship loans and advances to customers before impairment to due to customers
Loans and advances to customers
143.7%
146.9%
Loans and Receivables to Deposit Ratio
Due to Customers
Definition
Calculation
30.6.2016
31.12.2015
The indicator reflects
the relationship between recurring expenses and income
of the period.Total Expenses of the period less
Non recurring expenses48.2%
49.1%
Expenses/Income Ratio
Total Income of the period less
Gain less losse on financial transactions(Amounts in million of Euro)
Definition
Calculation
30.6.2016
31.12.2015
Loans and Receivables
to Deposit RatioThe indicator reflects the relationship loans and advances to customers before impairment to due to customers
Numerator
+
Loans and advances to customers
45,496
46,186
Denominator
+
Due to Customers
31,667
31,434
Ratio
=
143.7%
146.9%
(Amounts in million of Euro)
Definition
Calculation
30.6.2016
31.12.2015
Expenses/Income Ratio
The indicator reflects the relationship between recurring expenses and income of the period.
Numerator
+
Total Expenses of the period
603
563
-
Non recurring expenses
48
1
Denominator
+
Total Income of the period
1,211
1,180
-
Gain less losse on financial transactions
60
36
Ratio
=
48.2%
49.1%
Non recurring expenses as of 30.6.2016 are mainly related to the provision for the voluntary separation scheme of Alpha Bank Cyprus Ltd amounting to 31,5 million and other provision for the period amunting to 11,2 million, which are included in captions "Provision for voluntary separation scheme" and "Other expenses" respectively.
* Total expenses of the period include the proportion of the contribution to Resolution Fund for 2015 which was accounted in the third quarter of 2015 for comparison reasons.
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR URUVRNBAWOAR
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