Business Review 2015 - page 16-17

Letter from the Managing Director - CEO
phasing-inof repricingof new timedeposit rates, which
accelerated following the impositionof capital controls,
reaching circa 1% at theendof December 2015, aswell as
from the change in thedepositmix towards coredeposits.
Net Fee andCommission Income stood at Euro314.7
million, downby5.8% year-on-year, as the fragileeconomic
environment and the impositionof capital controls affected
adversely thebusiness activities, the loan restructuringefforts
aswell as the contribution frombrokerageoperations. On the
other hand, the switchof Customers’ payment behaviour led
to increased cards usage andenhanced the feegeneration
income. In addition, another record tourist seasonpositively
affected commissions from foreignexchange transactions.
Operatingexpenses, excludingextraordinary items and
integration costs, weredownby 7.6% year-on-year to
Euro 1,153.8million, beating the target of aEuro 1.2billion
annual cost base for 2015. TheCost to IncomeRatio stood
at 50.1% in2015, down from54.1% in2014. At theend
of December 2015, Personnel Expenses amounted to
Euro533.2million, downby21%, adjusted for the acquisition
of Citibank’sRetail Operations inGreece,mainly as a result
of the reducedheadcount following the successful Voluntary
SeparationScheme (VSS) at theendof 2014 leading to the
departureof 2,208Employees.
Additionally, within the secondhalf of the year, we concluded
successfully themajor projects of theoperational integration
of theCitibankBranchNetworkwith theAlphaBankBranch
Network and themigrationof DinersClub cards into the
Bank’s systems. In the areaof e-banking, weproceededwith
a full upgradeof theAlphaWebBanking andAlphaMobile
Banking services, offeringour Customers a user friendly and
secureelectronic transactionenvironment forwhich theBank
recently received four important distinctions at the2016
Lighthousee-volution awards.
OnNovember 26, 2015, theEuropeanCommission approved
AlphaBank’s amended three year RestructuringPlanwhich
consists of deepening theBank’s operational restructuring as
well as allowing certain flexibilities, including the resumption
of dividendpayments going forward. AlphaBank iswell
on track todeliver on itsRestructuringPlan commitments,
focusingonnon core asset deleveragingwith the completion
of saleof itsBulgarian andF.Y.R.O.M. operations and the
launchof the saleprocess for theHiltonAthens hotel.
InSoutheasternEurope, the coreoperating income for 2015
stood at Euro352.2million, downby5.4%on an annual
basis, while theoperating costs stood at Euro202.8million,
improvingby4.3%on an annual basis. As a result, Core
Pre-Provision Income stood at Euro 155.7million.
The total number of Branches inSoutheasternEurope,
excludingBulgarian andF.Y.R.O.M. operations, stood at 270
at theendof December 2015 versus 299 a year ago, as the
rightsizingof theoperatingplatform continues. Deposits of
the International NetworkdecreasedbyEuro 1 billionon an
annual basis, negatively affectedby thedevelopments in
Greece and, as a result, theNet Loans toDepositsRatio stood
at 176% at theendof December 2015.
In2015, through itsCorporateSocial Responsibility
Programmes, AlphaBank continued the implementationof
a number of initiatives and adoptedpolicies that are fully
alignedwithEuropean and international standards. In this
context and in tandemwith its responsiblebusiness activity,
theBank has been consistently supporting, for several years
now, actions in the fields of healthcare, culture, education
and theenvironment. In addition, it allocates part of its budget
to social contributionpurposes.
Furthermore, AlphaBankprovides financial assistance to
Foundations, Societies andOrganisations that support those
inneed and alsooffers books and computers to schools and
other Foundations acrossGreece.
Under theprogramme “Together, for better health”, designed
todonatepharmaceutical supplies andmedical equipment to
health centres onGreek islands, supplies andequipment have
beendelivereduntil today to thehealth centres on the islands
of Tilos, Nisyros, Lipsi, Kassos, Patmos, Symi, Astypalaia,
Karpathos, Chalki, Leros, Kalymnos andKos.
The year 2015 also saw the continuationof theBank’s
“HelpingHand” programme, designed to support socially
vulnerablegroups (individuals inneed, large families, the
elderly). Since the launchof theProgramme in2012, a total
of 15,000 cartswith food supplies havebeendelivered.
With regard toVolunteerism, theBank has an active and
strongpresenceboth inGreece and abroad. Indicativeof
this is that in2015participations in the “AlphaBankGroup
Volunteer Day”, which is held annually in all the countries
where theGroup is present, numberedmore than 1,900
Increasewas conducted through aprivateplacement of
Euro 1,552million toGreek and international institutional
investors and through a capitalisationofmonetary claims
of Euro 1,011million in the context of a voluntary exchange
offer of existing senior notes, subordinatednotes andhybrid
Theprivate character of theBankwas safeguarded as the
bookwas significantlyoversubscribed andwas covered
entirelyby theprivate sector. Following theShareCapital
Increase, AlphaBank features a strong and clean shareholder
structurewithprivate sector shareholding and free float
standing at 89% versus 34%before the Increase. At the same
time, Stateownership through theHFSFwas reduced to 11%.
At theendof December 2015, AlphaBank’smarket capitali-
sation reachedEuro3.8billion, thehighest in the sector, while
TangibleEquity amounted toEuro8.7billion.
The strong capital adequacy continues to constitute a
strategic advantage for theBank in the current volatile
economic environment. At theendof December 2015,
AlphaBank’sCommonEquityTier 1 (CET1) stood at Euro8.7
billion resulting in aCommonEquityTier 1 (CET1) Ratioof
16.7%. The fully loadedBasel III CET1Ratio stands at 16%.
TheRiskWeightedAssets (RWAs) amounted toEuro52.2
billion at theendof December 2015, downbyEuro0.5billion
year-on-year,mainlydue to lower loan contribution.
Despite the returnof theGreekEconomy to recession, the
NonPerformingLoans (NPLs) formation is encouraging.
In the fourthquarter of 2015, newNPLs stood at Euro214
million, less thanhalf of the corresponding amount in the third
quarter of 2015, asCustomer behaviour improved, leading
to the resumptionof the collection and restructuringefforts,
following the recent amendments on the legal and judicial
frameworkmentioned above. As a result, theNPL ratio stood
at 36.8% at theendof December 2015 and, bygeographical
area, it reached37.6% inGreece and33.7% inSoutheastern
For theGroup, thebusiness,mortgages and consumerNPL
ratio stood at 36.7%, 33.9% and46.1% respectively, while
their provisions cash coverage stood at 79%, 47% and80%
For the full year period, impairments stood at Euro3,019.8
million, further raising theNPLCashCoverageRatio to69%.
The total coverage including collateral stood at 126%.
The accumulatedbalance sheet provisions in combination
withhighquality collaterals protect theBank andplace it in
an advantageous positionduring the anticipated recoveryof
theeconomy. Accumulatedbalance sheet provisions for the
Group amounted toEuro 15.8billion at theendof the fourth
quarter of 2015. As a result, the ratioof loan loss reserves
over loans stood at 26%.
The toppriorityof theBank in the current environment is the
effectivemanagement ofNPLs, the timely recognitionof the
financial difficulties of Customers and theuseof all available
tools, such as restructuring, rescheduling andobtaining
additional collaterals, inorder tobest secure its interests
alongwith the viabilityof enterprises.
Credit expansion remained innegative territory in theprevious
year. Gross loans of theGroup amounted toEuro62billion,
downby0.5%on an annual basis. Loanbalances inGreece
stood at Euro52.5billion, while inSoutheasternEurope
loans amounted toEuro9.2billion, excludingBulgarian and
F.Y.R.O.M. operations.
Theextremeuncertainty conditions that prevailed in the first
half of 2015 related to sovereign andGrexit risk, in combi-
nationwith the increaseof tax obligations in the secondhalf
of the year, led tomassivedeposit outflows. In2015, Group
deposits recorded severeoutflows,mainly inGreeceduring
the first half of 2015 (Euro 10.6billion), affectedby the
increaseduncertainty at the sovereign level, while thedeposit
mix has shifted towards coredeposits. However, following the
impositionof capital controls, thedeclining trendof deposits
was halted.
As a result, theGroupdeposits base recorded an increase
toEuro31.4billion, stemming from corporates. InGreece,
deposits stood at Euro26.7billion at theendof December
2015, upbyEuro0.7billion in the fourthquarter of 2015, with
coredeposits frombusinesses accounting for themajorityof
inflows. TheLoan toDeposit Ratio at theendof December
2015 for theGroup stood at 147% and inGreece at 146%.
The core revenues remained resilient despite the adverse
operatingenvironment. Net Interest Income in2015 stood at
Euro 1,931.7million, as thebenefit from theongoing reduction
of timedeposit cost throughout the yearwas offset first
by theburdenderiving from thehigher dependenceonELA
and secondby the reductionof net loanbalances by
Euro3.4billion year-on-year. Deposit cost benefited from the
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