REG - Alpha Bank A.E. - Half-year Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 5
30/08/2016 18:25
- Part 5: For the preceding part double click ID:nRSd4619Id
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 E 162.7 million (31.12.2015: E 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 E 6.5 million on 30.6.2016 (31.12.2015: E 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 E 143.8 million (31.12.2015: E 96.9 million)
Additionally, the Group holds in its available for sale portfolio, bonds issued by the Italian Republic with a book value
of E 10.1 million (31.12.2015: E 6.9 million) and bonds issued by the Spanish Republic with a book value of E 8.5 million
(31.12.2015: E 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 TotalFair 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 TotalFair 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 E 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, E 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 Value Valuation Method Significant
Fair Value non-observable inputs
Derivative 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 Value Valuation Method Significant
Fair Value 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 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 E4.8 million of shares were transferred from Level 1 to Level 3 as for their value non observable data is
used. Also E3.7 million of derivative financial Assets and E 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 E11.3 million as well as other securities amounting to E3 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 E6.4 million and other securities amounting E9.2 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 Significant Total effect in income statement Total effect
non-observable inputs non-observable in Equity
inputs Change
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 E1.5-2.5 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 E 2,345 (31.12.2015: E 4,590).
Periods' interest expenses relating to deposits amount to E 16. Also the Supplementary Fund's assets include Alpha Bank's
shares of E 114 (31.12.2015: E 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. Αssets 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 E 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
E 387,947 and the liabilities of Bulgaria Branch amount to E 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 E 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 E 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 E 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 E 84,470 and its liabilities to E 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 E 10,973.
Ioniki Hotel Enterprises ΑΕ
The Group, on 17.2.2016, announced its intention to sell Ioniki Hotel Enterprises ΑΕ 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 E 187,191 (31.12.2015: E 185,701) while its liabilities amount to E 8,984 (31.12.2015: E 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 ΑΕ, APE Commercial Property ΑΕ, 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
E 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
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