REG - Alpha Bank A.E. - Half-year Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 7
30/08/2016 18:25
- Part 7: For the preceding part double click ID:nRSd4619If
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 Share Reserves Retained earnings Total
Capital premium
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 - - (257,773) (1,197,881) (1,455,654)
for the period, after income tax
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 - - 358,053 168,706 526,759
for the period, after income tax
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 Share Reserves Retained earnings Total
Capital premium
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 - - (81,877) 124,775 42,898
for the period, after income tax
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 E 20,970,465 and for warrants
E 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 E 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 E 10.3 billion, was approved. The first
disbursement of E 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 E 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 E 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 E 12.25 billion upon completion of the transaction.
ii. The distribution of preferred shares.
iii. The payment of the amount of E 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 E 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 E 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 E 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 E 3,364,080 (31.12.2015: E 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 Before income tax Income tax After
income tax income tax
Amounts 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 E 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 E ) 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 E ) 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 E ) 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 E 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 E 5 million (note 15). The value of
mortgage loans provided as coverage for these bonds amounts to E 16.7 million.
(1) In addition to the allowance of impairment losses regarding loans and advances to customers, a provision of E 298,203
(31.12.2015: E 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 E 10,304,270 (31.12.2015: E 10,072,234).
Allowance for impairment losses
Balance 1.1.2015 6,944,450
Changes for the period 1.1 - 30.6.2015
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