The highlights of ASPIS BANK Group financials are as follows:
Total assets increased by 17% to 2.9 billion euros.
Gross Loans increased by 19% to 2.25 billion euros.
Customer Deposits increased by 13% to 2.2 billion euros.
Operating income increased by 8% to ?97.3 million. Operating expenses increased by 13% to 78.2 million euros.
Profit before tax amounted to ?15.7 million and profit after tax to 7.1 million euros.
Total capital adequacy ratio reached 16.2%
In 2007, Aspis Bank Group continued its consistent organic growth and improved its infrastructure, without having been directly impacted by the recent turmoil in the international money and capital markets. The Group's growth is evidenced by the following actions:
On April 2007 new capital of 90 million euros was raised via the issue of Tier I hybrid capital and the Lower Tier II subordinated notes. The Bank's liquidity boost prior to the international credit crisis gives the Bank considerable leeway in the execution of growth plans with no immediate need for funding via international markets.
On October 2007 the Bank's new core banking IT system was put into operation following its infrastructure upgrade and procedure restructuring. The new, state-of-the-art IT system allows for greater flexibility, speed, security and breadth of management information, aiding the more effective implementation of the Bank's strategy going forward.
The Bank's branch network expanded by four additional branches in Attica, Thessalonica and Corfu leading to a total of 72 branches. New retail and SME banking products were launched, designed to provide its clientele with a full range of integrated and flexible solutions at competitive terms.
The implementation of the Bank's strategic plans during 2007 is reflected in the growth of the Group's banking operations, with loans (net of provisions) increased by 19% yoy against 14% in 2006 and customer deposits increased by 13% yoy. In a changing economic environment following the turmoil in the markets after H1 2007, profit after tax and minority interests amounted to ?6.9 million against 12.3 million euros in 2006. Bottom line results were materially affected by the charge of extraordinary tax of 5.6 million euros and the increased cost of servicing of 140 million euros hybrid and subordinated capital raised which is, however, offset by the very high total capital adequacy ratio.
Review of Results and Financial Figures
At the end of December 2007, total assets increased by 17% to 2.9 billion euros, driven by increase in loans (net of provisions), which account for 75% of total assets.
Loans net of provisions rose by 19% to 2.2 billion euros. Loans to households, and particularly mortgage loans, which have traditionally been the greatest proportion of the Bank's loan portfolio, continued to grow at a sufficient pace. New mortgage loan disbursements increased by 27% yoy with the total outstanding balance reaching 1.1 billion euros. However, as mortgage loans have relatively lower interest margins, this has driven effects to swift the Bank?s focus to SME financing. Thus, the Bank offered innovative, integrated solutions to its corporate customers, leading to a 28% growth of business loans, outpacing the market.
Customer deposits, accounting for 80% of total liabilities, remained as the major source of funding. Specifically, the outstanding balance of deposits grew by 13% yoy to 2.2 billion euros. In addition, ASPIS BANK, in order to support its growth plans, has a comprehensive fund raising plan. In this framework, during 2007 new capital was raised via the issuance of hybrid Tier I capital of 40 million euros and Lower Tier II subordinated notes of 50 million euros resulting in a significant increase of the regulatory capital by 90 million euros. In addition, these promptly raised new funds enhanced capital adequacy and brought the total capital ratio to 16.2%.
Growth of core banking activities, which account for 90% of total revenue, led to an increase of operating income by 8% to 97.3 million euros against the 90.2 euros million in 2006. However, intense competition, increase in the servicing costs of the raised funds and the cost of deposits, due to the credit markets turmoil, affected Group results. Despite the 21%increase of loan interest income, the relatively low interest margins of mortgage loans relative constrained net interest income growth to 4% or 55.9 million euros against 53.8 million euros in 2006. Commission income increased by 10% to 28.9 million euros led by growth in core banking business.
The completion of the Bank's restructuring of infrastructure and procedures demonstrated by the operation of the new core banking IT system and the promotion of its brand name were the main factors that drove the increase in operating expenses by 13%. However, despite the short-term cost, the advantages from the above actions are to be seen in the long term. Due the above, profit before tax decreased to 15.7 million euros and profit attributable to shareholders was limited to 6.9 million euros against 12.3 million euros in 2006.
The Chairman and Managing Director of Aspis Bank, Mr. Constantine B. Karatzas referring to the results, stated the following: "During 2007 we continued the implementation of the Bank's strategic plans with the expansion of our network in Greece, the operation of the new core banking IT system and prompt capital raising. Despite the decrease in the Bank's profits, it is important to mention that the Bank's revenue comes purely from banking operations. Adequate liquidity, strong capital adequacy, high credit quality and zero exposure to the subprime loan markets create a protective shield against the recent crisis in international markets. In an environment of economic instability and uncertainty, ASPIS BANK is in the position to enter the next phase of its strategy focused on higher organic growth and geographical expansion".