REG - Alpha Bank A.E. - Half-year Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 2
31/08/2017 18:15
- Part 2: For the preceding part double click ID:nRSe5112Pa
Amounts
in thousants of euro
Name Assets Liabilities Income Expenses Letters of guarantee and other guarantees
Banks
1. Alpha Bank London Ltd 17,517 2,871 2,978 637
2. Alpha Bank Cyprus Ltd 73,846 622,499 920 207 61,414
3. Alpha Bank Romania S.A. 1,075,108 176,055 2,348 1,407 324,566
4. Alpha Bank Srbija A.D. 267 85
5. Alpha Bank Albania SH.A. 20,336 30,980 31 240
Leasing
1. Alpha Leasing A.E. 192,842 537 2,332 55
2. ABC Factors A.E. 344,259 2,450 8,865 29 23,000
Investment Banking
1. Alpha Finance A.E.P.Ε.Υ. 790 17,993 466 620
2. SSIF Alpha Finance Romania S.A. 2
3. Alpha Α.Ε. Investment Holdings 3,897 34,514 3,886 123
4. Alpha A.E. Ventures Capital Management - ΑΚΕS 2,136 18 7
5. Emporiki Ventures Capital Developed Markets Ltd 9,300
6. Emporiki Ventures Capital Emerging Markets Ltd 8,894
Asset Management
1. Alpha Asset Management Α.Ε.D.Α.Κ. 7,496 35,714 10,344 190
Insurance
1. Alpha Insurance Agents Α.Ε. 2,543 6
2. Alphalife A.A.E.Z. 220 19,778 10,108 896
Real estate and hotel
1. Alpha Astika Akinita Α.Ε. 10,193 60,611 492 2,872
2. Oceanos Α.Τ.Ο.Ε.Ε. 1,975 5,634 1,975 13
3. Emporiki Development and Real Estate Α.Ε. 108 1 40
4. Alpha Real Estate Bulgaria E.O.O.D. 201
5. Chardash Trading E.O.O.D. 3,495 10
6. Alpha Investment Property Chalandriou Α.Ε. 4 1,285 109
7. Alpha Investment Property Attikis Α.Ε. 6,301 3 82
8. Alpha Investment Property Attikis II Α.Ε. 38,615 245 310
9. Alpha Investment Property Amaroussion ΙΑ.Ε. 1 153 8 1
10. Alpha Investment Property Amaroussion ΙΙΑ.Ε. 186 2
11. Stockfort Ltd 23,867 567 237
12. AGI-RRE Zeus S.R.L. 33,652 494
13. AGI-RRE Poseidon S.R.L. 13,377 223
14. AGI-BRE Participations 2 E.O.O.D. 9,084 126
15. AGI-BRE Participations 2BG E.O.O.D. 5,643 112
16. AGI-BRE Participations 3 E.O.O.D. 19,798 203
17. AGI-BRE Participations 4 E.O.O.D. 16,182 15,937
18. APE Fixed Assets Α.Ε. 8
19. HT-1 E.O.O.D. 463 4
20. SC Carmel Residential S.R.L. 6,987 240
21. AGI-RRE Cleopatra S.R.L. 12,788 267
22. AGI-RRE Hera S.R.L. 3,946 165
23. Alpha Investment Property Neas Kifisias Α.Ε. 2,959 16 25
24. Alpha Investment Property Kallirois Α.Ε. 50 45 1
25. Alpha Investment Property Livadias Α.Ε. 4,461 359 68
26. Alpha Investment Property Kefalariou Α.Ε. 291 1
27. Ashtrom Residents S.R.L. 9,951 254
28. AGI-BRE Participations 5 E.O.O.D. 8,700
29. Cubic Center Development S.A. 27,969 507
30. Alpha Investment Property Neas Erythreas Α.Ε. 9,422 505 123
31. Alpha Investment Property Chanion Α.Ε 7,010 1,128 525
32.AGI SRE Participation 1 DOO 22,303 107
33. Alpha Investment Property Spaton Α.Ε. 13,516 227 42
α. subsidiaries
Amounts in thousants of euro
Name Assets Liabilities Income Expenses Letters of guarantee and other guarantees
Special purpose and holding entities
1. Alpha Credit Group Plc 9,029
2. Alpha Group Jersey Ltd 36 15,281 15,542
3. Alpha Group Investments Ltd 1,940 59,073 1,940
4. Ionian Holdings Α.Ε. 4,290 344,091 4,290 859
5. Ionian Equity Participations Ltd 9,514
6. Emporiki Group Finance Plc 1,210
7. AGI-RRE Participations 1 Ltd 1,935
8. Alpha Group Ltd 15,777 15,804 15,777
9. Katanalotika Plc 1,199
10. Epihiro Plc 1,249
11. Irida Plc 376,483 132,587 17
12. Pisti 2010-1 Plc 142
13. Alpha Shipping Finance Ltd 4 147,518 3,126 6,511
14. Umera Ltd 415,778 26,645 758 35 1,467
15. AGI-RRE Poseidon Ltd 32,596 464
16. AGI-BRE Participations 4 Ltd 3,368 32
17. AGI-RRE Artemis Ltd 1,762 25
18. Zerelda Ltd 998
19. AGI-Cypre Ermis Ltd 1,041,380 141,472 9,612 622
20. AGI-SRE Ariadni DOO 771
21. AGI-CYPRE ALAMINOS LTD 8,359 84
22. AGI-CYPRE TOCHNI LTD 1,287 13
23. AGI-CYPRE MAZOTOS LTD 7,410 74
24. Alpha Proodos DAC 15 257,579 30 2,767
Other
1.Kafe Alpha A.E. 254 8 84
2. Alpha Supporting Service Α.Ε. 359 35,603 367 3,212
3. Real Car Rental A.E. 12
4. Evisak Α.Ε. 33 736 33 2
5. Emporiki Management Α.Ε. 21 1,890 30 5
6. Alpha Bank Notification Services Α.Ε. 80 2,335 87 2,767
Β. JOINT VENTURES
Amounts in thousants of euro
Name Assets Liabilities Income Expenses Letters of guarantee and other guarantees
1. APE Commercial Property Α.Ε. 13,783 33
2. APE Investment Property Α.Ε. 152,542 6,659 809 3
3. Alpha ΤΑΝΕΟΑ.Κ.Ε.S. 182
4. Rosequeens Properties S.R.L. 23,892 453
C. ASSOCIATES
Amounts in thousants of euro
Name Assets Liabilities Income Expenses Letters of guarantee and other guarantees
1. ΑΕDΕP Thessalias and Stereas Ellados 206
2. Banking Information Systems Α.Ε. 320
3. Olganos Α.Ε. 3,044 5
4. Alpha Investment Property Eleona Α.Ε. 51,609 20 414
5. Cepal Hellas Holdings A.E. (former Aktua Hellas 544 11,235 15 375
Holdings A.E.)
Total 4,189,336 2,294,632 88,500 23,454 427,248
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 - TAP 181 1
Hellenic Financial Stability Fund - HFSF 5
Athens, 31 August 2017
THE CHAIRMAN
OF THE BOARD OF DIRECTORS
VASILEIOS T. RAPANOS
I.D. No ΑΙ 666242
Interim Consolidated Financial Statements as at 30.6.2017
Interim Consolidated Income Statement
(Amounts in thousands of Euro)
From 1 January to From 1 April to
Note 30.6.2017 30.6.2016* 30.6.2017 30.6.2016*
Interest and similar income 1,271,758 1,366,823 639,647 669,589
Interest expense and similar charges (295,653) (414,033) (146,042) (192,824)
Net interest income 2 976,105 952,790 493,605 476,765
Fee and commission income 192,141 178,595 104,584 92,014
Commission expense (30,623) (22,930) (18,796) (13,467)
Net fee and commission income 161,518 155,665 85,788 78,547
Dividend income 530 1,120 499 529
Gains less losses on financial transactions 3 40,743 59,749 7,254 56,779
Other income 20,716 26,851 10,591 14,776
61,989 87,720 18,344 72,084
Total income 1,199,612 1,196,175 597,737 627,396
Staff costs 4 (236,541) (252,550) (119,390) (126,035)
Cost of voluntary separation scheme (31,480) (487)
General administrative expenses 5 (261,081) (239,956) (129,735) (125,345)
Depreciation and amortization (50,008) (48,415) (24,615) (23,082)
Other expenses (12,219) (16,229) (6,883) (12,677)
Total expenses before impairment losses and provisions to cover credit risk (559,849) (588,630) (280,623) (287,626)
Impairment losses and provisions to cover credit risk 6 (463,396) (605,925) (216,637) (350,039)
Share of profit/(loss) of associates and joint ventures (1,612) (1,967) (1,015) (506)
Profit/(loss) before income tax 174,755 (347) 99,462 (10,775)
Income tax 7 (56,768) (24,455) (28,719) (9,546)
Profit/(loss) after income tax from continuing operations 117,987 (24,802) 70,743 (20,321)
Profit/(Loss) after income tax from discontinued operations 27 (68,457) 5,858 (69,367) 3,541
Profit/(loss) after income tax 49,530 (18,944) 1,376 (16,780)
Profit/(loss) attributable to:
Equity owners of the Bank
- from continuing operations 118,027 (24,901) 70,805 (20,377)
- from discontinued operations (68,457) 5,858 (69,367) 3,541
49,570 (19,043) 1,438 (16,836)
Non-controlling interests
- from continuing operations (40) 99 (62) 56
Earnings/(losses) per share:
Basic and diluted (E per share) 8 0.03 (0.01) 0.00 (0.01)
Basic and diluted from continuing operations (E per share) 8 0.08 (0.02) 0.05 (0.01)
Basic and diluted from discontinued operations (E per share) 8 (0.04) 0.00 (0.04) 0.00
* The figures of the Interim Consolidated Income Statement of the comparative periods have been restated due to the
presentation of Alpha Bank Srbija A.D. as discontinued operation (note 29).
Interim Consolidated Balance Sheet
(Amounts in thousands of Euro)
Note 30.6.2017 31.12.2016
ASSETS
Cash and balances with Central Banks 1,200,466 1,514,607
Due from banks 1,807,881 1,969,281
Trading securities 10 7,278 4,701
Derivative financial assets 569,399 634,323
Loans and advances to customers 9 43,785,350 44,408,760
Investment securities
- Available for sale 10 5,670,718 5,217,053
- Held to maturity 10 21,356 44,999
- Loans and receivables 10 1,919,723 2,682,655
Investments in associates and joint ventures 19,917 21,792
Investment property 11 605,693 614,092
Property, plant and equipment 12 792,850 793,968
Goodwill and other intangible assets 13 374,610 371,314
Deferred tax assets 4,394,321 4,519,046
Other assets 1,427,374 1,450,459
62,596,936 64,247,050
Assets held for sale 27 113,042 625,216
Total Assets 62,709,978 64,872,266
LIABILITIES
Due to banks 14 17,216,061 19,105,577
Derivative financial liabilities 1,136,142 1,336,227
Due to customers (including debt securities in issue) 33,140,798 32,946,116
Debt securities in issue and other borrowed funds 15 505,377 616,865
Liabilities of current income tax and other taxes 28,432 33,778
Deferred tax liabilities 25,928 21,219
Employee defined benefit obligations 93,767 91,828
Other liabilities 758,809 879,185
Provisions 16 346,956 321,704
53,252,270 55,352,499
Liabilities related to assets held for sale 27 363 406,354
Total Liabilities 53,252,633 55,758,853
EQUITY
Equity attributable to equity owners of the Bank
Share capital 17 463,110 461,064
Share premium 17 10,801,029 10,790,870
Reserves 608,099 400,640
Amounts recognized directly in equity for held for sale items (122) (68,579)
Retained earnings 17 (2,459,079) (2,506,711)
9,413,037 9,077,284
Non-controlling interests 29,176 20,997
Hybrid securities 18 15,132 15,132
Total Equity 9,457,345 9,113,413
Total Liabilities and Equity 62,709,978 64,872,266
Interim Consolidated Statement of Comprehensive Income
(Amounts in thousands of Euro)
Note From 1 January to From 1 April to
30.6.2017 30.6.2016* 30.6.2017 30.6.2016*
Profit/(loss), after income tax, recognized in the income statement 49,530 (18,944) 1,376 (16,780)
Other comprehensive income recognized directly in equity:
Amounts that may be reclassified to the income statement
Net change in available for sale securities' reserve 236,380 (20,578) 208,168 73,568
Net change in cash flow hedge reserve 50,608 (127,695) 25,193 (28,443)
Exchange differences on translating and hedging the net investment in foreign operations 1,737 (601) 2,331 1,710
Income tax 7 (82,682) 38,643 (66,560) (15,856)
Amounts that may be reclassified to the income statement from continuing operations 206,043 (110,231) 169,132 30,979
Amounts that may be reclassified to the income statement from discontinued operations 68,457 (1,608) 69,367 (410)
Amounts that may not be reclassified to the income statement
Net change in actuarial gains/ (losses) in defined benefit obligations 4 29
Income Tax (1) (9)
3 - 20 -
Total of other comprehensive income recognized directly in equity, after income tax 7 274,503 (111,839) 238,519 30,569
Total comprehensive income for the period, after income tax 324,033 (130,783) 239,895 13,789
Total comprehensive income for the period attributable to:
Equity owners of the Bank
- from continuing operations 324,081 (135,094) 239,911 10,618
- from discontinued opearations 4,250 3,131
324,081 (130,844) 239,911 13,749
Non controlling interests
-from continuing operations (48) 61 (16) 40
--------------------------------
* The figures of the Interim Consolidated Income Statement of the comparative periods have been restated due to the
presentation of Alpha Bank Srbija A.D. as discontinued operation (note 29).
Interim Consolidated Statement of Changes in Equity
(Amounts in thousands of Euro)
Note Share Capital Share Reserves Retained earnings Total Non controlling interests Hybrid securities Total
Premium Equity
Balance 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/(loss) after income tax (19,043) (19,043) 99 (18,944)
Total 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 to 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
Changes for the period -
1.7 - 31.12.2016
Profit/(loss) after income tax 61,183 61,183 63 61,246
Total comprehensive income recognized directly in Equity, after income tax 141,009 (7,588) 133,421 26 133,447
Total comprehensive income for the period, after income tax - - 141,009 53,595 194,604 89 - 194,693
Purchases/sales and change of ownership interests in subsidiaries (32) 32 - (3,151) (3,151)
(Purchases), (redemptions)/sales of hybrid securities, after income tax 1 1 1
Appropriation to reserves 1,444 (1,444) - -
Other 20 20 20
Balance 31.12.2016 461,064 10,790,870 332,061 (2,506,711) 9,077,284 20,997 15,132 9,113,413
(Amounts in thousands of Euro)
Note Share Capital Share Reserves Retained earnings Total Non controlling interests Hybrid securities Total
Premium Equity
Balance 1.1.2017 461,064 10,790,870 332,061 (2,506,711) 9,077,284 20,997 15,132 9,113,413
Changes for the period
1.1 - 30.6.2017
Profit/(loss) after income tax 49,570 49,570 (40) 49,530
Total comprehensive income recognized directly in Equity, after income tax 274,508 3 274,511 (8) 274,503
Total comprehensive income for the period, after income tax - - 274,508 49,573 324,081 (48) - 324,033
Conversion of convertible bond into shares 17 2,046 10,159 12,205 12,205
Share capital increase expenses, after income tax (384) (384) (384)
Distribution of dividends - (7) (7)
Purchases/sales and change of ownership interests in subsidiaries - 8,234 8,234
Appropriation of reserves 1,408 (1,408) - -
Other (149) (149) (149)
Balance 30.6.2017 463,110 10,801,029 607,977 (2,459,079) 9,413,037 29,176 15,132 9,457,345
Interim Consolidated Statement of Cash Flows
(Amounts in thousands of Euro)
From 1 January to
Note 30.6.2017 30.6.2016*
Cash flows from continuing operating activities
Profit/(loss) before income tax 174,755 (347)
Adjustments for gains/(losses) before income tax for:
Depreciation/impairment/write-off of fixed assets 27,547 26,443
Amortization/impairment/write-off of intangible assets 26,832 21,972
Impairment losses from loans, provisions and staff leaving indemnity 507,345 642,620
(Gains)/losses from investing activities 7,960 (69,292)
(Gains)/losses from financing activities (10,826) 31,017
Share of (profit)/loss of associates and joint ventures 1,612 1,967
735,225 654,380
Net (increase)/decrease in assets relating to continuing operating activities:
Due from banks 326,838 (192,576)
Trading securities and derivative financial assets 62,346 (45,962)
Loans and advances to customers 201,411 276,939
Other assets 28,723 2,878
Net increase/(decrease) in liabilities relating to continuing operating activities:
Due to banks (1,889,517) (1,706,602)
Derivative financial liabilities (149,477) (18,826)
Due to customers 177,289 238,720
Other liabilities (123,805) 32,051
Net cash flows from continuing operating activities before taxes (630,967) (758,998)
Income taxes and other taxes paid (16,322) (17,767)
Net cash flows from continuing operating activities (647,289) (776,765)
Net cash flows from discontinued operating activities 7,010 (42,492)
Cash flows from continuing investing activities
Investments in associates and joint ventures (8,418) (98)
Amounts received from disposal of subsidiary 53,100
Dividends received 530 1,120
Acquisitions of fixed and intangible assets 11,12,13 (79,033) (97,357)
Disposals of fixed and intangible assets 23,491 44,008
Net (increase)/decrease in investement securities 609,736 638,708
Net cash flows from continuing investing activities 599,406 586,381
Net cash flows from discontinued investing activities (52,684) (349)
Cash flows from continuing financing activities
Receipts/(Repayments) of debt securities in issue and other borrowed funds (100,038) (81,617)
(Purchases)/sales of hybrid securities (15)
Share capital increase expenses 17 (463) (970)
Net cash flows from continuing financing activities (100,501) (82,602)
Effect of exchange rate differences on cash and cash equivalents (319) (24,489)
Net increase/(decrease) in cash flows from continuing activities (148,703) (297,475)
Net increase/(decrease) in cash flows from discontinued activities (45,674) (42,841)
Cash and cash equivalents at the beginning of the period 974,888 1,328,133
Cash and cash equivalents at the end of the period 780,511 987,817
-------------------------------------
* The figures of the Interim Consolidated Income Statement of the comparative period have been restated due to the
presentation of Alpha Bank Srbija A.D. as discontinued operation (note 29).
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 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 June 2017, consists of:
CHAIRMAN (Non Executive Member)
Vasileios T. Rapanos
VICE CHAIRMAN
(Non Executive Independent Member)
Evangelos J. Kaloussis */***
EXECUTIVE MEMBERS
MANAGING DIRECTOR
Demetrios P. Mantzounis
DEPUTY MANAGING DIRECTORS
Spyros N. Filaretos (COO)
Artemios Ch. Theodoridis
George C. Aronis
NON-EXECUTIVE MEMBERS
Efthimios O. Vidalis **/****
NON-EXECUTIVE INDEPENDENT MEMBERS
Ibrahim S. Dabdoub **/****
Carolyn Adele G.Dittmeier *
Richard R. Gildea **/***
Shahzad A. Shahbaz ***/****
Jan Oscar A. Vanhevel */***
NON-EXECUTIVE MEMBER
(in accordance with the requirements of Law 3864/2010)
Spyridon - Stavros A. Mavrogalos - Fotis */**/***/****
SECRETARY
George P. Triantafyllides
On 29.6.2017, the Board of Directors of the Bank has concluded that the Bank is not subject to the provisions of Law
3723/2008, and as a result Greek State's right and requirement to appoint a representative to the Bank's Board of
Directors, arising from the aforementioned Law, is ceased.
---------------------------------
* Member of the Audit Committee
** Member of the Remuneration Committee
*** Member of the Risk Management Committee
**** Member of Corporate Governance and Nominations Committee
On 30.6.2017, Ordinary General Meeting of shareholders has appointed the audit firm "Deloitte Certified Public Accountants
S.A." for the statutory audit of the year 2017.
The Bank's shares are listed in the Athens Stock Exchange since 1925 and are constantly included 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 FTSE Med100 and the FTSE4Good Emerging Index.
Apart from the Greek listing, the shares of the Bank are traded over the counter in New York (ADRs).
Total ordinary shares in issue as at 30 June 2017 were 1,543,699,381.
In Athens Stock Exchange are traded 1,374,524,235 ordinary shares of the Bank, while the Hellenic Financial Stability Fund
("HFSF") possesses the remaining 169,175,146 ordinary, registered, voting, paperless shares or percentage equal to 10.96%
on the total of ordinary shares issued by the Bank. The exercise of the voting rights for the shares of HFSF is subject to
restrictions according to the article 7a of Law 3864/2010.
In addition, on the Athens 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 2017, the average volume of shares trade stood at E 10,927,362 and for warrants at E 3,555.
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: CCC+
It is noted that according to No.8/754/14.4.2016 decision of the Hellenic Capital Market Commission Board of Directors with
subject "Special Topics for Periodic Reporting according to Law. 3556/30.4.2007", the obligation to publish Data and
Information arising from the quarterly and half-yearly financial statements, as previously stated by the No.4/507/28.4.2009
decision of the Hellenic Capital Market Commission Board of Directors, was abolished.
These interim financial statements have been approved by the Board of Directors on 31 August 2017.
Accounting Policies Applied
1.1 Basis of presentation
The Group has prepared the condensed interim financial statements as at 30.6.2017 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, until its conversion into shares that took place in the first quarter of
this year, was 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 31.12.2016.
The adoption by the European Union, by 31.12.2017, 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 1.1.2017, may affect retrospectively the periods presented in these interim
financial statements.
Regarding the new accounting standard IFRS 9, the application of which is mandatory from 1.1.2018, it is noted that the
Group has started a Program for the implementation of the new standard, as it is specifically mentioned in note 1.1 of the
annual financial statements of 31.12.2016, where also the main changes brought by the new standard in accounting for
financial instruments are explained. The progress of the program is evolving according to plan, while most of the
individual projects identified are in the implementation phase.
Progress of the IFRS 9 Implementation Program
The design of the governance framework and the process that will be followed for the classification of financial
instruments that will be recognized after 1.1.2018 is in progress. In particular, the high level design of the process for
the definition of business models as well as for the assessment of the characteristics of contractual cash flows has
significantly progressed. At the same time a detailed recording of the classification process in manuals is being carried
out and necessary enhancements/modifications are being implemented to IT applications.
Furthermore, regarding the classification of the existing portfolio, the following are noted:
• Loans and advances to customers and Due from banks are expected to be included in business models that permit the
classification of instruments at amortised cost (hold to collect), to the extent that from the assessment of their
contractual terms it is concluded that their contractual cash flows meet the definition of capital and interest as defined
by the new Standard (SPPI test). The above assessment of the contractual terms is in progress, while the final
classification into a business model will be held on 1.1.2018, based on the facts and circumstances prevailing at that
date.
• Bonds, and fixed income investments in general that have been classified as available-for-sale securities under IAS 39
will be recognized at amortized cost or at fair value through other comprehensive income recognised directly in equity,
depending on their business model, with the exception of those instruments whose contractual cash flows do not meet the
definition of capital and interest and that will be measured at fair value through profit or loss.
• For the majority of investments that meet the definition of an equity instrument, the Group plans to elect the
measurement at fair value through other comprehensive income recognised directly in equity.
With regards to the impairment work stream, the Group is completing the development of models for the calculation of credit
risk losses. The key parameters for determining the expected credit risk losses are the Probability of Default, the Loss
given Default, and the Exposure at Default.
At the same time, the process of developing analytical methodologies for the staging of financial instruments for which
impairment losses will be calculated depending on the degree of deterioration of the issuer/borrower's creditworthiness,
which will determine the financial instruments for which impairment losses will be calculated based on the probability of
default in the next twelve months (12 m expected losses) and those for which the corresponding impairment losses will be
calculated based on the probability of default over the life of the instruments (lifetime expected losses). In assessing
whether the credit risk of an instrument has increased significantly since initial recognition (sifnificant credit
deterioration), the Group will take into account reasonable and reliable information, both qualitative and quantitative,
that could be different between portfolios.
Finally, the Group is in the phase of designing the new governance framework for the calculation of credit loss allowances
and of recording the relevant process, which will be carried out through a new IT application.
Regarding hedge accounting, the Group intends to continue to apply the provisions of IAS 39.
Finally, the classification, measurement and impairment requirements apply retrospectively from 1.1.2018 without any
requirement to restate comparative information. The Group does not intend to restate comparative information in the context
of the transition to IFRS 9.
Impact of the application of IFRS 9
Until today, important assumptions in relation to IFRS 9 application have not been finalized and any impact analysis (e.g.
the exercise submitted to EBA) can be based on hypotheses, assumptions and simplified approaches that are still being
developed. Therefore, there is no specific and reliable information on the estimated quantitative and qualitative impact of
IFRS 9 on the Group's key supervisory indicators and / or financial position.
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 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 cases related
to 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
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