Laiki Bank Group (CPB) reported a highly satisfactory increase in first half profits, which surged 63.2% year-on-year to CYP 18.12 mln from CYP 11.1 mln a year ago, with the return on equity ratio climbing to 11.5% on an annualised basis, by far the best among the Cyprus banks.
Operating income increased to CYP 118.9 mln for a rise of 11.9% compared to the first six months of 2004. The net interest margin remained at a high level of the order of 2.81% (annualised) compared to 2.93% in 2004 with the decline attributed to the reduction in Cyprus pound interest rates. The Group’s other income, which mainly comprises the income from the insurance operations rose by 16,2% compared to the first six months of 2004.
The profit from disposal and revaluation of securities, which comprises realised and unrealised profits from the Groups’ trading investments, reached CYP 0.7 mln compared to a loss of CYP 0.9 mln.
The operating expenses of the Group increased by 7.2% to CYP 73.8 mln. The greatest part of operating expenses consists of staff costs that rose by 8.6% compared to the first six months of 2004.
The containment of the increase in operating expenses combined with the very satisfactory growth of the operating income led to the reduction of the cost to income ratio from 64.84% on 30.06.2004 to 62.10% on 30.06.2005.
The provisions for impairment of advances of the Group recorded a slight decrease of 1.6% compared to the corresponding period last year and reached CYP 22.7 mln. This further reduction in provisions is indicative of the gradual recovery of the advances portfolio of the Group.
The depreciation, amortisation and goodwill impairment of the Group increased by 26.7% compared to the corresponding period last year. Following the adoption of the revised International Accounting Standards 36 and 38 and the International Financial Reporting Standard 3 as from 01.01.2005, the Group performs periodical impairment tests on goodwill included in its assets, instead of the amortisation of goodwill over a specific long period of time. As a result, the Consolidated Income Statement of the Group for the first six months of 2005, was charged with impairment of goodwill of CYP 4.2 mln regarding the acquisition of the Paneuropean Group (CYP 900K) and Laiki Attalos Securities S.A. in Greece (CYP 3.3 mln). The amount that was written off in the corresponding period last year as amortisation of goodwill with the method of amortisation was CYP 2.2 mln.
Greece
The Greek operations became a drag on total earnings as the group was obliged to charge a CYP 1.7 mln impairment of goodwill charge related to its acquisition of Attalos Securities in 2000 for CYP 12 mln, of which there is still a remaining amount of CYP 1.7 mln in the books.
Laiki was also forced to hike provisions by 56.8% in the first half to CYP 4.8 mln from CYP 3.1 mln at a time when the total group provisions fell 1.6% to CYP 22.7 mln.
Net profit from the Greek operations after accounting for the impairment in value charge, amounted to CYP 0.9 mln from CYP 1.9 mln profits a year ago in the same period.
The number of branches reached 48 compared to 43 whereas since the end of June 2005 the Bank opened another 2 branches thus raising their number to 50.
The percentage of non-performing loans to total advances (excluding interest in suspense) dropped to 11.3% from 11.5% on 31.12.04.
The percentage coverage of non-performing loans by accumulated provisions, including and excluding interest in suspense, registered satisfactory increases compared to 31.12.04 and reached 58.8% and 52.9% respectively.
The Group’s advances rose to CYP 4,0 bln recording an annual increase of 13.9%. The advances in Greece increased 24.8% to CYP 1.2 bln. The Group’s customer deposits recorded an annual growth of 16.8% and reached CYP 5.1 bln. In Greece, customer deposits reached CYP 1.3 bln, recording an annual growth of 28%.
