Overview of T Bank Group Financials
The highlights of T Bank Group for YE2010, summarized as follows, reflect the negative effects of the greek economic crisis in the profitability, loan portfolio quality, credit expansion and liquidity of the Greek Banking Sector. T Bank Group's loan loss provisions remained high, loan interest and commission income continued to decrease but were not fully offset by falling operating and interest expenses due to interest rate de-escalation leading to losses after tax and minority interest of €71.3 million:
Total assets increased by €129 million in Q42010 and by €304 million or 13% yoy to €2.7 billion versus €2.4 billion at the end of 2009 Gross Loans increased by €77 million in Q42010 but decreased by €36 million or 2% yoy to €1.94 billion versus €1.98 billion at the end of 2009. Accumulated loan provisions (after write-offs) increased by €1 million in Q42010 and by €27 million or 26% yoy to €130.4 million versus €103.7 million at the end of 2009.
Total investments in securities (Available for Sale, Trading, Held to Maturity) increased by €62 million in Q42010 and by €499 million yoy to €551.1 million versus €51.6 million at the end of 2009.
Customer deposits increased by €10 million in Q42010 but decreased by €68 million or 4% yoy to €1.70 billion versus €1.77 billion at the end of 2009.
Pre tax loss decreased to €71.8 million versus €77.2 million in 2009.
Loss after tax and minority interests amounted to €71.3 million.
Total Group Equity amounted to €76.7 million versus €107.4 million at the end of 2009.
Review of Group Balance Sheet
T Bank Group's volumes reflect the greek banking system's negative credit expansion as a result of liquidity pressures on Banks and a fall in loan demand as a result of general financial distress. Given the increased credit risk to which the Bank and the Greek banking system are exposed, T Bank continues to increase provisions for loan losses. Therefore, accumulated loan loss provisions after write-offs increased to €130.4 million versus €103.7 million in YE2009. Gross loans decreased by 2% yoy to €1.9 billion. However, in Q42010 gross loans increased by €77 million, mainly due to a €68 million increase in loans to small and medium sized enterprises and a €20 million increase in shipping loans.
Total investments in securities (Available for Sale, Trading, Held to Maturity) increased by €499 million yoy to €551.1 million versus €51.6 million at the end of 2009. In Q42010 investments in securities increased by €62 million. Such increase is due to investments in Greek Government Bonds (GGBs) which amounted to €516.6 million in YE2010. The GGBs are used as collateral in order that the Bank raises liquidity from the ECB. The increase in security investments and the quarterly loan growth led to an increase in total assets by €129 million quarterly and by €304 million or 13% yoy to €2.7 billion.
Following the deposits net inflow of €244 million (on a consolidated basis) during H12010, group customer deposits amounted to €1.70 billion thus reducing the outflows from September 2009 up to and including H1 2010.
Group total equity, although strengthened in Q1 2010 further to a share capital increase, amounted to €76.7 million from €107.4 million as at 31.12.2009, as a result of the accumulation of significant losses in the current and previous financial years.
Review of Group results
The effects of the adverse economic environment on credit expansion have impacted interest and commission income. The significant reduction in operating and interest expenses, on an annual and quarterly basis, as well as the increase in interest income from investment in GGBs could not fully offset the loan income reduction and allow the Bank return to profitability.
Interest income fell by 16% yoy to €100.6 million with loan interest income decreased by 26% yoy to €85.6 million and security interest income increased by 272% yoy to €15 million due to investment in high yielding GGBs. Interest income reduction was fully offset by interest expense reduction by 30% yoy to €64.6 million, with deposit interest expenses decreased by 28% yoy and bond loans interest expenses decreased by 49% yoy, resulting in a 31%increase in net interest income to €35.9 million compared to €27.5 million in FY2009.
The containment of the Bank's operations and adverse capital market conditions resulted in a reduction of net commission income by 35% to €11.2 million. Profits from financial transactions-mainly forex transactions- amounted to €600K.
Total operating expenses decreased by €8 million or 8% yoy to €87.3 million with administrative expenses reduced by 16% yoy to €29.9 million mainly due to the containment of third party fees by 31%, cost of renting and maintaining the Bank's branches and administration premises by 4%and the drastic reduction of promotional and advertising cost. Staff expenses decreased by 2.1% yoy to €46.2 million and depreciation decreased by 10% σε €11.1 million. The ongoing rationalization of operating cost with a more efficient reorganization, staffing and merger of branches and central departments is expected to further reduce costs.
As a result, loss before tax reduced to €71.8 million from €77.2 million in FY2009. Loss after tax and minority interests amounted to €71.3 million compared to €61.8 million in FY2009. Such increase is due suspension of recognition of tax income from tax loss in 2010.
Due to losses in 2010 and previous financial years, the consolidated total capital ratio reached 4.5% and the Tier I capital ratio reached 2.25%. The Bank's BoD recognizes that the capital adequacy ratios are lower than the levels set by the regulatory framework and has examined its options in cooperation with its main shareholder, TT Hellenic Postbank S.A., in order to ensure its unhampered operations. Among these options is a share capital increase, a merger with its main shareholder, increase of main shareholder's participation in the Bank's share capital in order to fulfill the regulatory capital requirements or get financial support through the stability programs. The reason for which the Management has not concluded on specific measures is that each of the options available has to be approved by the Bank's shareholders General Meeting, including its main shareholder -TT Hellenic Postbank S.A. -and the regulator, Bank of Greece, a process which is still pending. The main shareholder, who is represented in the Bank's BoD, has stated his intention to act accordingly in order to satisfy the regulator's capital requirements.
Concluding, it is worth mentioning that, under the circumstances, the Bank has sufficient liquidity sources in order to support its liquidity needs and by all means the Bank's management will continue implementing its plans for the improvement of the quality of its loan portfolio and drastic reduction of its operating expenses