REG - Alpha Bank A.E. - Half-year Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 7
31/08/2017 18:16
- Part 7: For the preceding part double click ID:nRSe5112Pf
(81,617) (81,617)
(Purchases)/sales of hybrid securities (15) (15)
Share capital increase expenses (970) (970)
Net cash flows from continuing financing activities (82,602) - (82,602)
Effect of exchange rate differences on cash and cash equivalents (24,489) (24,489)
Net increase/(decrease) in cash flows - continuing activities (294,656) (2,819) (297,475)
Net increase/(decrease) in cash flows - discontinued activities (45,660) 2,819 (42,841)
Cash and cash equivalents at the beginning of the period 1,328,133 - 1,328,133
Cash and cash equivalents at the end of the period 987,817 - 987,817
30. Events after the balance sheet date
There are no significant subsequent events after balance sheet date that have an effect to these interim consolidated
financial statements.
Athens, 31 August 2017
THE CHAIRMAN THE MANAGING DIRECTOR THE GENERAL MANAGER THE ACCOUNTING
OF THE BOARD OF DIRECTORS AND CHIEF FINANCIAL OFFICER AND TAX MANAGER
VASILEIOS T. RAPANOSID. No. ΑΙ 666242 DEMETRIOS P. MANTZOUNISID. No. Ι 166670 VASSILIOS E. PSALTISID. No. ΑΙ 666591 MARIANNA D. ANTONIOUID. No. Χ 694507
Interim Financial Statements as at 30.6.2017
Interim Income Statement
(Amounts in thousands of Euro)
From 1 January to
Note 30.6.2017 30.6.2016
Interest and similar income 2 1,127,970 1,217,793
Interest expense and similar charges 2 (276,301) (394,512)
Net interest income 2 851,669 823,281
Fee and commission income 165,133 152,019
Commission expense (28,196) (20,210)
Net fee and commission income 136,937 131,809
Dividend income 3 35,488 75,756
Gains less losses on financial transactions 4 42,599 48,850
Other income 7,187 5,111
85,274 129,717
Total income 1,073,880 1,084,807
Staff costs 5 (188,945) (197,364)
General administrative expenses 6 (219,440) (194,496)
Depreciation and amortization 13,14,15 (36,741) (35,276)
Other expenses (7,716) (7,677)
Total expenses before impairment losses and provisions to cover credit risk (452,842) (434,813)
Impairment losses and provisions to cover credit risk 7 (354,608) (520,732)
Profit/(Loss) before income tax 266,430 129,262
Income tax 8 (54,510) (4,720)
Profit/(Loss) after income tax from continuing operations 211,920 124,542
Profit/(Loss) after income tax from discontinued operations 26 233
Profit/(loss), after income tax 211,920 124,775
Earnings/(losses) per share:
Basic and diluted (E per share) 9 0.1375 0.0812
Basic and diluted from continuing operations (E per share) 9 0.1375 0.0810
Basic and diluted from discontinued operations (E per share) 9 - 0.0002
Interim Balance Sheet
(Amounts in thousands of Euro)
Note 30.6.2017 31.12.2016
ASSETS
Cash and balances with Central Banks 618,531 674,439
Due from banks 2,538,604 2,912,313
Trading securities 11 5,022 2,865
Derivative financial assets 569,897 644,436
Loans and advances to customers 10 39,160,698 40,261,524
Investment securities
- Available for sale 11 4,815,525 4,360,047
- Held to maturity 11 318 9,342
- Loans and receivables 11 1,919,723 2,682,655
Investments in subsidiaries, associates and joint ventures 12 2,029,593 1,815,255
Investment property 13 27,660 27,836
Property, plant and equipment 14 663,274 675,870
Goodwill and other intangible assets 15 338,831 333,926
Deferred tax assets 4,343,361 4,477,144
Other assets 1,382,575 1,378,290
58,413,612 60,255,942
Assets held for sale 26 96,070 146,631
Total Assets 58,509,682 60,402,573
LIABILITIES
Due to banks 16 17,985,355 19,433,001
Derivative financial liabilities 1,147,202 1,337,559
Due to customers 28,911,752 29,009,979
Debt securities in issue and other borrowed funds 17 427,245 598,759
Liabilities of current income tax and other taxes 9,911 19,419
Employee defined benefit obligations 90,994 89,126
Other liabilities 698,875 806,500
Provisions 18 94,364 383,188
Total Liabilities 49,365,698 51,677,531
EQUITY
Share capital 19 463,110 461,064
Share premium 19 10,801,029 10,790,870
Reserves 403,198 208,187
Retained earnings 19 (2,523,353) (2,735,079)
Total Equity 9,143,984 8,725,042
Total Liabilities and Equity 58,509,682 60,402,573
Interim Statement of Comprehensive Income
(Amounts in thousands of Euro)
From 1 January to
Note 30.6.2017 30.6.2016
Profit/(Loss), after income tax, recognized in the Income Statement 211,920 124,775
Other comprehensive income recognized directly in Equity:
Amounts that may be reclassified to the Income Statement
Net change in available for sale securities' reserve 8 222,935 13,470
Net change in cash flow hedge reserve 8 51,427 (128,790)
Income tax 8 (79,351) 33,443
Amounts that may be reclassified to the Income Statement 8 195,011 (81,877)
Total comprehensive income recognized directly in Equity, after income tax 195,011 (81,877)
Total comprehensive income for the period, after income tax 406,931 42,898
Total comprehensive income for the period after income tax attributable to:
Equity owners of the Bank
- from continuing operations 406,931 42,665
- from dicontinued operations 233
Interim Statement of Changes in Equity
(Amounts in thousands of Euro)
Note Share Capital Share premium Reserves Retained earnings Total
Balance 1.1.2016 461,064 10,790,870 153,631 (2,987,532) 8,418,033
Changes for the period
1.1 - 30.6.2016
Profit/(loss) after income tax 124,775 124,775
Total comprehensive income recognized directly in Equity, after income tax 8 (81,877) (81,877)
Total comprehensive income for the period, after income tax - - (81,877) 124,775 42,898
Share capital increase expenses, after income tax (688) (688)
Balance 30.6.2016 461,064 10,790,870 71,754 (2,863,445) 8,460,243
Changes for the period
1.7 - 31.12.2016
Profit/(loss) after income tax 135,843 135,843
Total comprehensive income recognized directly in Equity, after income tax 136,433 (7,477) 128,956
Total comprehensive income for the period, after income tax - - 136,433 128,366 264,799
Balance 31.12.2016 461,064 10,790,870 208,187 (2,735,079) 8,725,042
(Amounts in thousands of Euro)
Note Share Capital Share premium Reserves Retained earnings Total
Balance 1.1.2017 461,064 10,790,870 208,187 (2,735,079) 8,725,042
Changes for the period
1.1 - 30.6.2017
Profit/(loss) after income tax 211,920 211,920
Total comprehensive income recognized directly in Equity, after income tax 8 195,011 195,011
Total comprehensive income for the period, after income tax 195,011 211,920 406,931
Conversion of convertible bond loan into shares 19 2,046 10,159 12,205
Share capital increase expenses, after income tax (194) (194)
Balance 30.6.2017 463,110 10,801,029 403,198 (2,523,353) 9,143,984
Interim 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 266,430 129,262
Adjustments for gains/(losses) before income tax for:
Depreciation/ impairment of fixed assets 13,14 15,361 16,034
Amortization of intangible assets 15 21,380 19,242
Impairment losses from loans, provisions and staff leaving indemnity 373,125 500,914
Impairment of investments 29,363
(Gains)/losses from investing activities (81,418) (109,402)
(Gains)/losses from financing activities (6,515) 29,913
588,363 615,326
Net (increase)/decrease in Assets relating to continuing operating activities:
Due from banks 280,084 123,361
Trading securities and derivative financial assets 72,382 (46,753)
Loans and advances to customers 195,952 63,078
Other assets 58,318 (7,883)
Net increase/(decrease) in Liabilities relating to continuing operating activities:
Due to banks (1,447,646) (1,349,563)
Derivative financial liabilities (138,931) (11,370)
Due to customers (115,823) (47,253)
Other liabilities (105,991) 836
Net cash flows from continuing operating activities before taxes (613,292) (660,221)
Income taxes and other taxes paid (9,508) (9,486)
Net cash flows from continuing operating activities (622,800) (669,707)
Net cash flows from discontinued operating activities (17,434)
Cash flows from continuing investing activities
Investments in subsidiaries, associates and joint ventures 28,652 (69,771)
Disposals of subsidiaries, associates and joint ventures 26,264
Dividends received 118 5,116
Acquisitions of fixed and intangible assets 13,14,15 (35,919) (53,883)
Disposals of fixed and intangible assets 1,283 892
Net (increase)/decrease in investment securities 588,124 865,799
Net cash flows from continuing investing activities 608,522 748,153
Net cash flows from discontinued investing activities (9,906)
Cash flows from continuing financing activities
Share capital increase expenses 19 (273) (970)
Recoveries on debt securities in issue and other borrowed funds 17 39,977
Repayments of debt securities in issue and other borrowed funds (175,213) (87,622)
Net cash flows from continuing financing activities (135,509) (88,592)
Effect of exchange rate differences on cash and cash equivalents 257 (418)
Net increase/(decrease) in cash flows from continuing activities (149,530) (10,564)
Net increase/(decrease) in cash flows from discontinued activities - (27,340)
Cash and cash equivalents at the beginning of the period 648,091 765,248
Cash and cash equivalents at the end of the period 498,561 727,344
Notes to the Interim Financial Statements
General Information
The Bank, operates under the brand name of Alpha Bank A.E. using the sign of ALPHA BANK. The Bank's registered office is 40
Stadiou Street, Athens and is listed in the General Commercial Register with registration number 223701000 (ex. societe
anonyme registration number 6066/06/B/86/05). The Bank's duration is until 2100 but may be extended by the General Meeting
of Shareholders.
In accordance with article 4 of the Articles of Incorporation, the Bank's objective is to engage, on its own account or on
behalf of third parties, in Greece and abroad, independently or collectively, including joint ventures with third parties,
in any and all (main and secondary) operations, activities, transactions and services allowed to credit institutions, in
conformity with whatever rules and regulations (domestic, community, foreign) may be in force each time. In order to serve
this objective, the Bank may perform any kind of action, operation or transaction which, directly or indirectly, is
pertinent, complementary or auxiliary to the purposes mentioned above.
The tenure of the Board of Directors which was elected by the Ordinary General Meeting of Shareholders on 27.6.2014 expires
in 2018.
The Board of Directors as at 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 Bank 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 Bank in preparing the condensed interim financial statements are consistent with
those stated in the published financial statements for the year ended on 31.12.2016.
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
Bank 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 Bank plans to elect the
measurement at fair value through other comprehensive income recognised directly in equity.
With regards to the impairment work stream, the Bank 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 (significant credit
deterioration), the Bank will take into account reasonable and reliable information, both qualitative and quantitative,
that could be different between portfolios.
Finally, the Bank 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 Bank 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 Bank 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 Bank's key supervisory indicators and / or financial position.
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 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 cases related
to 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 30.6.2017. For the
application of this principle, the Bank takes into consideration current economic developments in order to make estimations
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 unstable economic environment in Greece and abroad and to the liquidity
levels of the Hellenic Republic and the banking system, as specifically analysed in Note 1.29.1 of the annual financial
statements as at 31.12.2016. In addition, regarding the progress of the Hellenic Republic financial support program, it is
noted that within June the second assessment of the program was completed and the partial disbursement of the third
installment amounting to E 8.5 billion was approved. The first disbursement of E 7.7 billion took place in July and covered
public debt servicing needs by an amount of E 6.9 billion and clearance of amounts in arrears due from the Hellenic
Republic to individuals by an amount ofE 0.8 billion. The second disbursement ofE 0.8 billion will be made under the
condition that the Hellenic Republic will contribute using its own economic recourses to the arrears clearance effort. The
completion of the second evaluation, the disbursement of installments and the successful issue by the Hellenic Republic, in
July of the current year, of a five year bond of E3 billion, which is the first step for the gradual return to the markets,
are expected to contribute to the decrease of uncertainty, the enhancement of business community and investors confidence
and consequently, to the return of the economy to positive growth rates.
Based on the above and taking into account the Bank's high capital adequacy (note 24) as well as the amount of available
eligible collaterals through which liquidity is obtained through the 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 is presented in note
22. 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.
As far as debt sustainability is concerned and in accordance with the relevant framework set out by the Eurogroup of
9.5.2016, in the meeting of the same body held in 24.5.2016 measures for enhancing the Greek debt sustainability were
broadly described, separately for the short, the medium and the long term. In accordance with this framework, based on the
baseline scenario, the gross financing needs of the Greek government should be less than the 15% of GDP after the
completion of the program in the medium term while subsequently they should be less than the 20% of GDP. The Eurogroup of
15.6.2017 confirmed the above target. From the above measures of debt relief only the short-term have been specified and
put in place.
Following the successful completion of the program for the financial support of the Hellenic Republic, and to the degree
deemed necessary, the medium term measures for the Greek debt will be put in place. The specification of these measures
will be validated at the end of the program by the Eurogroup so that debt sustainability is ensured. In a long term horizon
and in the case of an unexpected unfavorable scenario additional measures for the debt could be applied.
Finally, within July of the current year, the Hellenic Republic issued a five year bond of an amount of E 3 billion. The
issuance of the bond and the fact that it was successfully covered are the first steps for the Hellenic Republic to
gradually regain access to the financial markets to cover its financing needs.
Based on the above, the Bank has not recognized impairment losses on the Greek Government securities that it held as at
30.6.2017, 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 30.6.2017 has not changed significantly
compared to the respective amount as at 31.12.2016. Therefore, what is stated in note 1.29.3 of the annual financial
statements of 31.12.2016 regarding the main categories of deferred tax assets recognized is also applicable to these
financial statements. In addition, regarding the methodology applied for the recoverability assessment, what is stated in
the aforementioned note of the annual financial statements is also applicable, taking also into consideration the elements
that formed the result of the current period.
Income Statement
2. Net interest income
From 1 January to
30.6.2017 30.6.2016
Interest and similar income
Due from banks 2,057 10,413
Loans and advances to customers 970,899 1,017,823
Trading securities 136 108
Available for sale securities 102,041 110,276
Held to maturity securities (22) 5
Loans and receivables securities 749 4,819
Derivative financial instruments 46,238 67,215
Other 5,872 7,134
Total 1,127,970 1,217,793
Interest and similar expense
Due to banks (103,863) (154,706)
Due to customers (69,367) (81,373)
Debt securities in issue and other borrowed funds (4,349) (40,458)
Derivative financial instruments (53,091) (72,153)
Other (45,631) (45,822)
Total (276,301) (394,512)
Net interest income 851,669 823,281
During the first semester of 2017 net interest income increased due to the reduction of securities issued by the Bank, that
are guaranteed by the Greek Government, according to the Law 3723/2008, amounting to E 5.2 billion and the reduction of
borrowing cost.
3. Dividend income
From 1 January to
30.6.2017 30.6.2016
Available for sale securities 327 449
Subsidiaries and associates 35,161 75,307
Total 35,488 75,756
As at 30.6.2017 the Bank has recorded dividends whose distribution has been approved by the Ordinary Shareholders General
Meetings of its subsidiaries.
4. Gains less losses on financial transactions
From 1 January to
30.6.2017 30.6.2016
Foreign exchange differences 6,844 10,613
Trading securities:
- Bonds 726 515
- Shares 134
Investment securities
- Bonds 43,151 12,412
- Shares 639 61,273
- Other securities 963 (1,143)
Loans and receivables 3,058 10,876
Investments (3,046) (34,279)
Derivative financial instruments 25,481 (19,586)
Other financial instruments (35,351) 8,169
Total 42,599 48,850
Current period's "Gains less losses on financial transactions" were affected mainly by:
• Loss of E 37.3 million included in "Other financial instruments" arising from a fair value measurement, at the initial
recognition, of the Bank's financial assets in the context of loans and receivables restructuring.
• Gains of E 29.5 million included in "Bonds" of investment portfolio as a result of the sale of Greek Government Bonds.
An amount of E 13.7 million concerns to the disposal of other corporate bonds.
• Gains of E 30 million included in "Derivative financial instruments" concerns to the credit valuation adjustment of
transactions with the Greek Government due to the reduce of its credit risk.
The "Gains less losses on financial transactions" of the first semester of 2016 were mainly affected by the acquisition of
Visa Europe shares from Visa Inc. in the context of which the Bank recognized 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 the preference shares of Visa Inc. acquired under the abovementioned 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".
5. Staff costs
From 1 January to
30.6.2017 30.6.2016
Wages and salaries 131,027 136,896
Social security contribution 41,534 41,773
Common insurance fund of Bank employees 1,314
Employee defined benefit obligation 150 1,526
Bank's employees indemnity provision due to retirement in accordance with Law 2112/1920 1,912 1,992
Other charges 14,322 13,863
Total 188,945 197,364
Staff Costs amounted to E 188.9 million for first semester of 2017 compared to E 197.4 million of the first semester of
2016 mailnly due to the reduction of personnel following the implementation of a separation scheme.
The total number of Bank's employees as at 30.6.2017 stood at 8,604 (30.6.2016: 9.055) out of which 8.563 (30.6.2016:
9.017) were employed in Greece and 41 (30.6.2016: 38) were employed abroad.
6. General administrative expenses
From 1 January to
30.6.2017 30.6.2016
Operating leases for buildings 14,799 15,875
Rent and maintenance of EDP equipment 10,019 9,569
EDP expenses 12,487 12,391
Marketing and advertisement expenses 8,524 9,084
Telecommunications and postage 7,930 10,094
Third party fees 24,565 13,560
Consultants fees 3,734 2,701
Contribution to the Deposit Guarantee Fund / Investments Fund and Solvency Fund 22,987 28,485
Insurance 3,553 4,949
Consumables 1,280 2,133
Electricity 3,371 3,635
Taxes (VAT, real estate etc) 31,857 27,668
Services from collection agencies 16,264 12,760
Building and equipment maintenance 2,193 2,648
Security 3,698 4,071
Cleaning fees 1,509 1,568
Commission for the amount of Deferred Tax Asset guaranteed by the Greek State (note 8) 8,666
Other 42,004 33,305
Total 219,440 194,496
General administrative expenses for the first semester of 2017 present an increase compared to the comparative period,
mainly due to the burdened third parties fees resulting from the intensified debt collection activities.
Moreover, the results of the first semester of 2017 were burdened by E 8.7 million, which relates to the annual commission
attributed to the amount of deferred tax asset, guaranteed by the Greek State, according to the article 82 of Law
4472/19.5.2017, out of which E 5.8 million relates to the commission for the year 2016. According to the Law, the
respective commission is paid within 6 months from the end of the taxable period, starting from 30.6.2017.
7. Impairment losses and provisions to cover credit risk
From 1 January to
30.6.2017 30.6.2016
Impairment losses on loans and advances to customers (note 10) 362,943 526,803
Provisions to cover credit risk relating to off balance sheet items (471) 3,210
Recoveries (7,864) (9,281)
Total 354,608 520,732
8. 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 is 29% after 1
January 2015, from 26% that was in force.
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 the first 10 days of the 10th month after the end of the
audited financial year, as well as electronically to the Ministry of Finance, no later than the end of the 10th month after
the end of the audited financial year. In accordance with article 56 of Law 4410/3.8.2016 for the fiscal years from
1.1.2016 onwards, the issuance of tax certificate is rendered optional. Intention of the Bank is to continue to received a
tax certificate.
For fiscal years 2011 up to 2015 the tax audit of the Bank has been completed and the Bank has received tax certificate
without any qualifications, whereas for year 2016 the Bank is expected to receive tax certificate without any
qualifications.
Income tax expense is analyzed as follows:
From 1 January to
30.6.2017 30.6.2016
Deferred tax 54,510 4,720
Total 54,510 4,720
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
30.6.2017 30.6.2016
Debit difference of Law 4046/2012 22,277 22,277
Debit difference of Law 4465/2017 1,264
Depreciation and write-offs of fixed assets 7,021 6,610
Valuation/impairment of loans (2,339) (57,910)
Valuation of loans due to hedging (110) (640)
Employee defined benefit obligations and insurance funds 18,970 25,185
Valuation of derivatives 14,684 (6,054)
Effective interest rate 760 (279)
Fair value change of liabilities to credit institutions and other borrowed funds due to fair value hedge (39,501) 3,471
Valuation of investments 28,438 (20,243)
Valuation/impairment of bonds and other securities 14,117 13,506
Tax losses carried forward 12,088 23,965
Other temporary differences (23,159) (5,168)
Total 54,510 4,720
A reconciliation between the nominal and effective tax rate is provided below:
From 1 January to
30.6.2017 30.6.2016
% %
Profit/(loss) before income tax 266,430 129,262
Income tax (nominal tax rate) 29 77,265 29 37,486
Increase/(decrease) due to:
Non taxable income (3.85) (10,250) (25.51) (32,974)
Non deductible expenses 0.47 1,250 0.72 932
Other tax adjustments (5.16) (13,755) (0.56) (724)
Income tax 20.46 54,510 3.65 4,720
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 approval of the General Meeting of Shareholders, relates to tax assets
arising from 2016 onwards and refers to tax period of 2015
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 4340/1.11.2015 "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 legislation according to article 5 of Law
4303/17.10.2014 and relates to accumulated provisions and other general losses due to credit risk, is limited to the amount
related to the provisions for credit risk, which were accounted until 30.6.2015.
According to article 43 of Law 4465/4.4.2017 "Integration of Directive 2014/92/EU of the European Parliament and Council
held on 23.7.2014 for the comparability of
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