The Laiki Bank Group (CPB) reported a 42.5% increase in net profits to CYP 9 mln during the first quarter, boosting total operating income by 10.4% while squeezing cost increases to 8%, a day before it holds its Annual General Meeting of shareholders.
The island’s second largest financial institution also joined its peer, Bank of Cyprus, in announcing an ambitious target to raise the Return on Equity (ROE) ratio to 12% by 2007 from 7.2% end of 2004 and 3.45% end of 2003.
The fact that the Bank has already lifted its ROE during the first quarter to 11.55% and is forecast by analysts to report CYP 38 mln in net profits for 2005, means that it will be able to meet its target from this year.
The Group also revealed that it will aim to achieve an annual increase
in income of 15% and to reduce the Cost to Income Ratio to 58%. The Group’s profitability prospects for the whole of 2005 are very positive and under the existing financial conditions, the Group’s profitability for 2005 is expected to be significantly improved, the Bank said.
Total operating income was up 10.4% year-on-year (y/y) to CYP 58.8 mln of which CYP 39.2 mln originated from net interest income (up 14.6%) and CYP 11.8 mln from fees & commission (up 5.6%) and forex income at CYP 2.9 mln (down 11.1%).
Operating expenses advanced by 8.1% to CYP 36.3 mln y/y. The restraint of operating expenses together with the increase of the operating income resulted in an improvement in the Group Cost/Income ratio from
62.34% at end of 2004 to 61.68% as at March 2005. Included in the expenses is a charge of CYP 1 mln for the impairment of goodwill included in the Group assets with respect to the acquisition of the Paneuropean Group and of a subsidiary company abroad following the implementation of IAS 36 and 38.
The Group’s other expenses rose by 11.5% due to the expansion drive abroad and the establishment and operation of a new bank in Guernsey (Channel Islands).
The Group’s provisions for impairment of advances fell 4.2% y/y to CYP 11 mln from CYP 11.5 mln a year ago. The ratio of Non-performing Loans to Gross Advances climbed to 11.7% in the first quarter from 11.5% while the cumulative provisions to non-performing loans ratio was 56.6% including interest suspended and 50.8% excluding suspended interest.
Net after tax profits after minority interest increased 42.5% y/y to CYP 8.97 mln in the first quarter of 2005 compared to CYP 6.29 mln a year ago in the same period. Earnings per share climbed to 3.0 cent from 2.1 cent previously.
Greece shines
Group profit before provisions in Greece advanced by 30.5% to CYP 3.9 mln and represent 17.3% of total Group profits before provisions, while the increase in profit after tax reached 27.2%. Operating expenses in Greece have presented a decelerating rate of increase of 9.1%, despite the fact that the Bank continues its significant investments in the expansion of the branch network and in technological upgrading. The Bank’s branch network consists of 48 branches end of March compared to 42 a year ago.
The Group’s advances reached CYP 3.9 bln recording an annual increase of 12.9%. Advances in Greece increased 22.7% and reached CYP 1.1 bln.
Customer deposits recorded an increase of 13.3% to CYP 4.8 bln. The Group’s deposits in Cyprus increased 9.7% while deposits in Greece jumped 26.5%.
