FIRST QUARTER 2003 RESULTS | Eurobank
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FIRST QUARTER 2003 RESULTS

FIRST QUARTER 2003 RESULTS
FIRST QUARTER 2003 RESULTS
(According to International Accounting Standards) Net profit at € 65 million
Shareholders’ Equity at € 2.0 billion
EFG Eurobank Ergasias announces consolidated financial results for the first quarter of 2003 under International Accounting Standards (IAS) and Greek Accounting Standards (GAS). Q1 2003 accounts include Romanian Banc Post (fully consolidated as of November 2002) and Bulgarian Post Bank (accounted for using the equity method as of September 2002). Consequently, the financial figures of Q1 2003 are mostly comparable to those of Q4 2002.During the first quarter of 2003, EFG Eurobank Ergasias further enhanced its position in the Greek market, particularly in the areas of consumer lending, small business lending, asset management and capital markets. The Group’s strong presence in key segments contributed to the increase of Core revenues, including net interest and fee income, by 16% to € 266 million, thus maintained at the considerably high levels of Q4 2002. Personnel and administrative expenses increased by 3.5% on a comparable basis . Depreciation, as well as provisions aimed at safeguarding the Bank, remained stable at the levels of the previous quarter. As a result, consolidated net profit after tax attributable to the shareholders of EFG Eurobank Ergasias amounted to € 65 million, more than double the profits of the preceding quarter (€ 27 million) and receding by 4% against Q1 2002 (€ 67 million). Consolidated profit before tax and after minorities amounted to € 86 million, compared to € 61 million in Q4 2002 (+40%) and € 93 million in Q1 2002 (-8%).Shareholders’ Equity as per IAS includes all the necessary adjustments on valuations of the various portfolios, as well as liabilities to third parties, and amounted to € 2.0 billion for the Group. This figure, which is one of the highest in the Greek banking system, ensures the ability of the Group to maintain strong growth rates in the foreseeable future, and provides EFG Eurobank Ergasias with the necessary flexibility in its strategic options. EVOLUTION OF KEY FIGURES IN Q1 2003 Total Assets increased 20% reaching € 23.9 billion, compared to € 19.8 billion at the end of March 2002, as the dynamic growth in business volumes continues and the Group’s position in the Greek market expands. More specifically:
  • Customer Loans grew 20% y.o.y. amounting to € 13.6 billion. Household lending expanded by 30% while business lending increased 15%. More specifically, Consumer Credit rose 31% to € 2.9 billion and Mortgage Credit to individuals by 28%, reaching € 2.4 billion. Organic non-performing loans (NPLs) remained at 3% of the total loan book and are 82% covered by provisions. Bad debt provision charges for Q1 2003 remained at the levels of the previous quarter, amounting to € 32 million.
  • Customer Deposits 2 recorded a 4% increase y.o.y and amounted to € 16.5 billion. Deposits excluding repos grew 13.7%, reaching € 14 billion. Total Customer Funds, including customer deposits, repos, mutual funds and other investment products, rose by 3% to € 23 billion at current prices, in spite of the drop in equity portfolios. Shareholders’ Equity, following the absorption of former Ergoinvest S.A. on March 15, stood at € 2 billion at the end of Q1 2003 and remains among the strongest in the sector. The Capital Adequacy Ratio stands at 12.2%, comprising almost solely Tier 1 capital.Net Interest Income recorded a significant increase of 19% over Q1 2002, and 4% over Q4 2002, reaching € 200 million, due to the strong lending growth and the loan book composition (retail loans), and contributed 75% of total operating income. The net interest margin (net interest income over avg. total assets) remained above 3%.Net Fee and Commission Income amounted to € 65 million, rising above the quarterly average of 2002 (€ 62 million) and increasing by 6.8% compared to Q1 2002, in an adverse environment. The increase is mainly attributable to the distribution of new products and services and market share gains. As a result Core Income, comprising net interest and net fee income, repeated the high levels reported in Q4 2002, defying the relevant trend of previous fiscal years, and reached € 266 million, rising 16% over Q1 2002. As far as non- core Income is concerned, the aggregate result of Dividend Income, Net trading income, Gains less Losses from other Securities and Other Operating Income was marginally positive and amounted to € 2 million, compared to a corresponding positive result of € 22 million in Q1 2002, and € 31 million in Q4 2002. This was the combined result of dividends, foreign exchange and bond gains, as well as adjustments and lossed in equity positions. Total Operating Expenses before depreciation, comprising personnel and administrative expenses recorded a notable slowdown on a comparable basis3, expanding by 3.5%, while overall they amounted to € 142 million. Depreciation remained at the levels of the preceding quarter (€ 22 million). These trends are compatible with an increase of total operating expenses of 5%, on a comparable basis, for the current fiscal year. Bad debt provisions also remained virtually unchanged at the levels of the preceding quarter (€ 32 million). Thus Core Profit (core income less operating expenses and provisions) climbed 21.5% over the previous quarter to € 70 million from € 58 million. Return on average Equity (ROE) and Return on average Assets (ROA) after tax in Q1 2003 amounted to 13.31% and 0.79% respectively. The first quarter of 2003 was characterised by an adverse corporate environment internationally, a fact that was illustrated in the postponement of investment decisions on the one hand, and at a further decline of stock prices on the other. Following the end of the war in Iraq a gradual improvement of these conditions is noticeable. The Group, steadily geared towards growth, and properly positioned in the local market, is undertaking initiatives to create value for its shareholders, by enhancing its competitiveness and exploiting opportunities presented by the market. With the acquisition of a controlling stake in the share capital of Serbian bank Postbanka AD at the end of March, EFG Eurobank Ergasias spreads out its operational presence in yet another country in SE Europe. The Group plans to develop the systems of Postbanka and activate the bank’s operations in the areas of retail and corporate banking. The merger with Ergoinvest S.A. has been already completed, while the procedures for the merger with Investment Development Fund S.A. are underway. These acquisitions lead to efficiency gains and cost synergies in the areas of asset management, as well as to capital adequacy improvement. Moreover, the recent restructuring of the wholesale banking division leads to improved corporate client service, thus enhancing the Group’s position in the segment of small and medium enterprises, to the benefit of shareholders. GREEK GAAP (GAS) AND INTERNATIONAL ACCOUNTING STANDARDS (IAS)EFG Eurobank Ergasias has long opted for reporting its financial results according to IAS and GAS, focusing however the analysis of these results in the statements prepared according to IAS. Financial statements and results based on IAS fully reflect the Group’s financial position, and allow for comparisons with other banks worldwide. On the other hand, GAS are restricted by Greek tax legislation. According to Greek GAAP, the results for the Group of EFG Eurobank Ergasias in 2002 are as follows: Total Assets amounted to € 24.9 billion, from € 19.8 billion in Q1 2002. Loans and advances to clients reached € 13.6 billion, from € 11.4 billion. Customer Deposits reached € 16.7 billion, from € 16.1 billion at the end of March 2002. Total Shareholders’ Equity increased to € 1.9 billion. Net Interest Income amounted to € 204 million from € 168 million, while the net interest margin remained above 3%. Core Income (net interest income and net fee and commission income) reached € 270 million from € 229 million in Q1 2002. Total Operating income stood at € 282 million, from € 241 million. Consolidated profit before tax after minorities amounted to € 79 million, from € 83 million. Consolidated net profit after tax and minorities for Q1 2003 reached € 59 million compared to € 61 million in 1Q 2002.
    EFG Eurobank Ergasias Key Figures according to IAS
    (in million euros)Q1 2003Q4 2002Q1 2002Q1-o-Q1 %Q1-o-Q4 %
    BALANCE SHEET
    Total Assets 4 23.88024.72319.813+20,5%-3,4%
    Net Loans & Advances to Customers 413.58813.34111.359+19,6%+1,9%
    Due to Customers 416.52816.94815.875+4,1%-2,5%
    Shareholders Equity1.9881.8992.011-1,2%+4,7%
    INCOME STATEMENT
    Net Interest Income  200192168+19,3%+4,1%
    Net Commission Income 657461+6,8%-11,2%
    Core Banking Revenue266266229+15,9%+0,0%
    Total Operating Income 268297251+6,6%-9,8%
    Core Profit 705873-3,8%+21,5%
    Profit before tax 866193-8,0%+40,3%
    Net profit after tax & minorities 652767-3,8%+137,1%
    4 excluding settlement balances
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