Attica Bank: Losses of € 105.4 million after taxes in 2021

LAST UPDATE: 09.29

Losses after taxes of 105.4 million euros were recorded by Attica Bank in the year 2021, despite a significant increase in commission income by 69%, but also a smaller increase in operating income (+ 4.7%).

According to the bank’s announcement, in 2021 the institution recorded a reduction in financing costs by 16% on an annual basis, an increase in deposits of 4.3% on an annual basis.

Attica Bank also saw credit expansion in 2021, with an increase in new financing and refinancing by 12% compared to the comparative year of 361 million euros.

11.2% of the up-to-date loan portfolio (before forecasts) has been included in the regulations in force due to the Covid-19 pandemic.

The non-performing exposures ratio (NPE) stood at 33.6% at the end of last year, while the coverage ratio from forecasts to 45.5%,.

The capital adequacy ratios of the CET1 and CAD Group amounted to 8.3% and 11.84% respectively.

More specifically, the loans before provisions amounted to € 1.66 billion. The credit expansion (new financing and refinancing) for the year amounted to approximately € 361 million, of which € 334.0 million relates to business banking and € 27.1 million retail banking and which is expected to increase further in the coming quarters as a result of the Bank’s strategy for financing investments mainly in the energy, infrastructure and tourism sectors.

Increase in deposits + 4.3% per year with lower costs

Eurosystem funding remained zero at the end of 2021 from € 155 million in 2020. At 31.12.2021, the accounting balance of deposits amounted to € 2.92 billion, showing a further increase of approximately € 120 million and 4, 3% on an annual basis, while in the current year, the balance of customer deposits amounts to approximately € 3.01 billion, reflecting the positive outlook prevailing in the domestic environment.

The increase in deposits reflects inflows, mainly from individuals, amounting to € 86 million and from companies amounting to € 85.2 million, measured on an annual basis. Savings and cash deposits amounted to € 1,096 million, while time deposits amounted to € 1,814 million. compared to 2020, while a significant reduction was observed in the average cost of time deposits by 0.33 bp. The significant improvement in liquidity has made the Group more focused on cost management throughout 2021, in an effort to strike a balance between attracting deposits and reducing interest expenses.

As a result, the loans (before provisions) ratio to the Group’s deposits amounted to 56.7% while the liquidity coverage ratio (LCR) amounted to 256%, a percentage well above the supervisory threshold. Complete Capital Raise Coverage Complete Coverage Complete Capital Increase Complete Share Capital Coverage Complete Capital Increase Coverage Coverage Capital Capital Increasing Capital Increase Capital Increase share capital increase, amounting to € 240 million.

In April 2022, and following their letter of 13.12.2021, the Bank received a letter from the main shareholders of TMEDE, Rinoa Ltd – Ellington Solutions SA, HFSF describing the basic provisions of the agreement between them and their intention to proceed with a second investment in the Bank, totaling up to € 365 million, through a second share capital increase and, if required, a third capital injection and / or additional alternative actions. The process until the receipt of the preliminary credit ratings is in full swing and the relevant reports are expected in the two months of June – July 2022.

Due to the fact that all the required procedures are still in progress, at this stage the Bank’s Management can not make a reliable assessment of the value of the high repayment bonds of Omega, Astir 1 and 2 securities, and consequently in reliable measurement of the amount of additional impairment losses that may arise if the Bank continues with this Omega, Astir 1 and 2 securitization management strategy to obtain the minimum required BB- credit rating.

During the first months of 2022, the Bank also planned additional actions aimed at further strengthening its regulatory capital. More specifically, the Bank’s management envisages the sale of the POS activity (estimated positive impact of 80 basis points on the CET1 index) and the active utilization of investment properties (estimated positive effect of 30 basis points on CET1 terms).

Performances

The Bank presented an operating result for 2021 before provisions, a loss of € 25.1 million mainly due to the reduction of interest income and the significant reduction resulting from the results of financial operations and investment portfolio operations of the Bank. Net interest income is reduced by 16.2% compared to the corresponding comparative year of 2020.

The negative impact is mainly related to the reduction of interest income by 12.4% from loans and receivables to customers as a result of large repayments during 2021, which reduction was partially offset only by the lower cost of financing the Bank’s operations by 16% in compared to the comparative year 2020. The reduction of financing costs is a consequence of the revaluation of deposit products, as well as the de-escalation of financing costs by liquidity mechanisms. Significant Increase in Commission Revenue. Further Reduction of Personnel Expenditures on an annual basis. Cost base rationalization. New Voluntary Exit Program.

Fee and commission income in 2021 amounted to € 21.4 million, a remarkable return throughout the year. Key contributors to the significant increase were the granting of new loans and letters of guarantee as well as the income from transactions via credit cards. Προσωπ Remuneration and staff costs decreased by 3.4% on an annual basis, as reflected in the savings from the restructuring of human resources. More specifically, through the voluntary retirement program in which 64 employees participated, the Bank saved an amount of € 2.6 million.

The Bank on 09.03.2022 announced a new program of voluntary departure of staff. The participation in this program amounted to 104 people, which corresponds to about 14% of the total staff of the Bank. The annual savings amount to 4.5 million euros.

According to the relevant results announcement of the administration In 2021, Attica Bank successfully completed both the 240 million share capital increase and the improvement of its key capital ratios and liquidity ratios. 2022 is expected to be a milestone year in its course as The agreement of the main shareholders of TMEDE, RinoaEllington Solutions SA and HFSF for the further capital increase and the course of its privatization, Attica Bank lays the foundations for the achievement of the strategic business goals of the period 2022-2024, which will contribute catalytically to the sustainable In this context, it is easier to focus on purely banking, boosting business and household credit expansion and, consequently, financing the real economy.

Over the past year, Attica Bank has focused on its planning, its modernization in key areas such as the improvement and upgrading of IT infrastructure, the digital transformation to automate processes. The conclusion of strategic alliances with companies of recognized prestige in the context of optimizing the internal infrastructure of the Bank and the creation of a restructuring framework, will help the Bank to play an important role in the development of the real economy in the coming years. For the year ended, new financing and refinancing amounted to € 361 million, which also boosted commission income.

More specifically, commission income shows a significant increase of 69% on an annual basis (including non-recurring commission income of € 5.5 million) with the largest improvement achieved through the increase in revenue / commission income, amounting to 55 %, while the cost of financing the Bank’s operations continued its downward trend in the last quarter of 2021. In addition, the Bank continued to improve its liquidity, which shows a further improvement, mainly due to the increase in the balances of its deposits. of its customers, on an annual basis, by 4.3%. During the first months of 2022, the Bank planned additional actions aimed at further strengthening its regulatory capital. More specifically, the Bank’s management decided to sell the POS activity, as well as the active utilization of its investment properties.

At the same time, the main goal of the Bank remains the further strengthening of its revenues as well as the reduction of the base costs in order for Attica Bank to return immediately to organic profitability. At the same time, in April 2022, the Bank’s Management received a letter from the main shareholders TMEDE, Rinoa Ltd – Ellington Solutions SA and HFSF, which shows, based on the agreement between them, their intention for a second investment under to cover any losses related to the restoration of capital ratios, as well as the capital support of the Bank in order to implement its development program on the basis of its strategic business plan which, among other things, provides for the reduction of MEAs to single digits.

2022 will be a milestone year for Attica Bank with the completion of the securitization evaluation process and the implementation of the individual actions of the key shareholders’ agreement. In this way, the Consolidation of the Balance Sheet will be achieved and supervisory funds will be released, which will be channeled for the development of the Bank’s operations and the significant increase of its loan portfolio. In addition, for 2022, it is noted that the prospects of the Greek economy appear attractive, despite the escalation of the international energy crisis, rising inflation and growing geopolitical tensions as a result of the Russian invasion of Ukraine, but also global supply and demand conditions. . Although the magnitude of the impact of the geopolitical turmoil on the domestic economy cannot be accurately estimated, the country is expected to grow significantly in the coming years, also benefiting from access to European Recovery and Resilience Fund (RRF) funds.