…revises 2008 targets higher
Laiki Bank lifted its first nine month profits by 90.3% year-on-year to CYP 30.5 mln from CYP 16 mln a year ago in the same period, beating market expectations by a wide margin.
Analysts polled by the Financial Mirror had forecast Laiki lifting profits by 78% to CYP 28.5 mln. The financial performance was highly satisfactory leading the Group to revise higher its 2008 targets.
Earnings per share jumped to 13.3 cents per share from 6.9 cent end of 2004 and 3.1 cent end of 2003. Return on asset improved to 0.67% from 0.39%, return on equity while the price to earnings ratio based on current prices was 16.4x.
Laiki is now aiming to lift its Return-on-Equity (ROE) target to 14% by 2008 from the annualised 12.7% at the end of September 2005 and 7.2% in 2004.
The cost to income ratio, which was 59.8% end of September is now seen heading lower to 56% by 2008, 2 notches below the 58% previous target by 2007 and 62.3% in 2004.
The ratio of Non-performing Loans (NPLs) to total loans is seen declining to 8% from 12.2% end of September 2005 and 12.8% end of 2004.
“We are by far the most profitable bank among the Cypriot banks,” declared Christos Stylianides, General Manager Laiki when presenting the results.
Operating income increased by 11.6% to CYP 183.1 mln, of which net interest income was up 12.1% at CYP 124.2 mln, net fees and commissions were up 9.3% at CYP 38.3 mln, foreign exchange income was down 11.5% at CYP 8.7 mln and income from insurance operations was up 11% at CYP 10.5 mln.
The Group’s net interest margin improved to 2.84% annualised basis from 2.93% in 2004 and 2.79% in 2003 despite the decreases in Cyprus pound interest rates, which were somehow countered by a rise in US dollar rates.
Profit from disposal and revaluation of securities reached CYP 1.4 mln in the first nine months compared to a loss of CYP 1.2 mln a year ago as the CSE staged a rebound.
Total expenses were up 5.1% at CYP 109.5 mln of which staff costs were up 8.5% at CYP 69.6 mln, depreciation up 7.8% at CYP 12.1 mln and other expenses up 2.6% at CYP 27.8 mln.
Greece
Laiki Hellas staged a very good performance during the first nine months of the year, with net interest income up 18% at CYP 27.7 mln, while operating expenses were up 5.6% at CYP 22.9 mln. After accounting for CYP 1.7 mln in impairment of goodwill being the share of impairment in the value of investment in Laiki Attalos Securities S.A., which is exceptional and a 32% hike in provisions to CYP 6.7 mln, the Greek operation profit after tax jumped 4.2% to CYP 2.8 mln from CYP 2.6 mln a year ago. Excluding the impairment charge, the Greek profits would be up 42%.
Provisions
The provision for doubtful debts fell 2.8% to CYP 34.1 mln. The percentage of non-performing loans to total loans fell to 12.2% as at end of September from 12.7%, while the percentage of coverage of NPLs registered a satisfactory increaser and reached 62.7% including interest in suspense and 56.9% excluding interest in suspense.
Balance Sheet
Group advances increased by 15.4% to CYP 4.1 bln of which advances in Cyprus were up 9.1% at CYP 2.4 bln while advances in Greece were up 25.5% to CYP 1.2 bln.
Group customer deposits were up 19.9% at CYP 5.38 bln of which Cyprus deposits were up 17.3% at CYP 3.5 bln while deposits in Greece were up 28.6% at CYP 1.3 bln.
