Marfin Popular lifts 2006 profits

Marfin Popular Bank Group announced that its proforma profit after tax attributable to shareholders posted a substantial 235% YoY increase to EUR 396.6 mln (CYP 229.3 mln) from 2005.

The published Marfin Popular Bank Group Profit and Loss account for the year to 31.12.2006 contains only the profits of Laiki group since the consolidation of the three groups took place on the 22.12.2006.

The published Group Balance Sheet at 31.12.2006 shows the three groups consolidated. Therefore, to make meaningful comparisons MPB refer to the proforma Profit and Loss accounts for 2006 and 2005. The proforma Profit and Loss account for 2006 assumes that the three groups were merged from 01.01.2006 and for 2005 that they were merged  from 01.01.2005.

The proforma Earnings per share has been calculated using the proforma Net profits attibutable to shareholders and the full number of shares on 31.12.2006. The EPS has jumped to EUR0.50 (CYP 0.29) recording a growth of 235%.

The proforma Cost to Income Ratio has dropped to 40.5% in 2006 compared to 59,1% in 2005 indicating a significant improvement in the new group efficiency. The proforma Net Interest Margin reached 2,7% compared to 2.8% in 2005. The Marfin Popular Bank Group on a stand-alone basis has maintained its high Net Interest Margin at 2,9%.

The proforma Operating income recorded an impressive growth of 74% compared to 2005 and reached EUR 1,150.9 mln compared to EUR 660.1 mln in 2005.

The loan portfolio has increased to EUR 12.0 billion compared to EUR9.8 bln in 2005, recording an increase of 23%. The majority of the loan portfolio (68.8%) is contributed by Marfin Popular Bank, with Egnatia contributing 22.8% and MFG the rest. 

MFG has performed better that the guidance with an increase of 105% compared to 2005.

The new group demonstrates improved Asset Quality indicators compared to 2005. The NPL coverage has increased to 67,1% from 66,0% in 2005, whereas the NPL ratio has dropped to 6,6% compared to 9,1% in 2005.

It should be noted that the NPL ratio is driven up by the Cypriot operations of the group, where the legal proceedings for the realisation of securities are much slower that the European average, leading to large balances of fully provided advances to remain on the Balance Sheet for longer periods (sometimes up to 10 years). The write offs are consequently slower and are usually made only when all efforts for recovery are exhausted.

The group customer deposits have had a significant growth of 22%, from EUR13,3 bln in 2005 to EUR16,2 bln in 2006. The main contributors to this growth have been the Marfin Popular Bank and MFG. MPB in Cyprus has access to a lower cost customer base, adding significantly to the potential of future cost of funding synergies on a regional basis.

The loans to deposits ratio stood in Dec 06 at 74.1%, which is one of the healthiest in the region, underpinning the future dynamic growth of the loan portfolio.

The International operations include Laiki Bank Australia, Laiki UK Operations, Laiki Serbia and Egnatia Operations in Romania. The operations in Serbia were acquired in January 2006. A voluntary retirement scheme was implimented to reduce the number of staff from 338 to 280 at 31.12.06, costing an estimated EUR 1.7 mln. A branch network restructuring is also underway with a view of integrating and opening new branches to improve geographical coverage. Furthermore the advances portfolio acquired has been subjected to the same strict criteria of the rest of the group and, as anticipated, significant provisions were made in 2006. All the above and the charge for the amortisation of intangible assets acquired, resulted in a net loss of EUR 10.9 mln for 2006. This is the main reason why the Net Profit from the International Operations dropped by 51% to EUR 8 mln.