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NATIONAL BANK OF GREECE SA 6-K 2006 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant
to rule 13a-16 or 15d-16 of For the month of August 2006 National Bank of Greece S.A. (Translation of registrant’s name into English) 86 Eolou Street, 10232 Athens, Greece (Address of principal executive offices) [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F)
[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.
[If “Yes” is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b):
National Bank of Greece Press Release 2006 six-month Results +65% growth in net
profit
I am pleased to announce that on the basis of the 1H 2006 results, NBG Group once more reaffirms its capability to offer its shareholders high returns. With equity returns over 30%, the NBG Group ranks among the best performing financial institutions in Europe.
The high profitability achieved in the 1H 2006 has resulted not only from growth in income from Greece and abroad, but also from our efforts for stringent control of expenses.
The Group’s positive course so far does not mean that we will relax our vigilance. The Bank’s recent, successful share capital increase, the completion of the acquisition of 46% of Finansbank and the prospects for the Group’s further expansion in Southeast Europe serve to accomplish our strategic objective for rendering National Bank of Greece as the leading financial institution in the region.
Athens,
August 2006
The Group’s return on equity reached a historic high of 34.5% that still remains at 30% even after profit adjustments for the extraordinary results, as above, on the basis of which the Bank ranks first in Greece and among the leading banks of Europe in terms of return on equity. The Group’s performance reflects above all an improvement in the Group’s core income, given that in Q2 2006 adverse circumstances prevailed in international markets, which did not allow for trading gains during the said period. Accordingly, the improvement was clearly driven by growth in banking business in the domestic market and Southeast Europe, as well as further reductions in operating costs. The positive developments as regards control of operating costs are reflected in the spectacular enhancement in the Group’s cost/income ratio to below 50%, specifically at 46.7%, an improvement of 840 basis points compared with H1 2005 and 540 basis points relative to 2005. This performance exceeded the targets of NBG’s Business Plan 2005-2007, despite a 33% increase in operating costs in Southeast Europe due to expansion of the Group’s activities in the area. The improvement in the Group’s core income reflects consistent growth in interest income and commission income. The Group’s net interest income reached €887 million, 17% up compared to H1 2005, chiefly as a result of an improvement in the structure of the Group’s assets through continued growth in the retail lending portfolio. The momentum of this improvement is notably reflected in the 7% quarterly growth posted between Q1 and Q2 2006, propelling net interest income to a historic high of €459 million, which has driven net interest margin to 3.47% in Q2 2006 compared with 2.94% in Q2 2005 and 3.16% for 2005 as a whole. In H1 2006, net commission income rose to €238 million, up by 20% compared to H1 2005, as a result of overall growth in all sources of commission, reflecting the Group’s successful strategic choices in the areas of retail/corporate banking and management of funds.
Consistent growth in commissions from retail and, mostly, corporate lending is driven by steady growth in retail and corporate business along with the promotion of cross-selling, to compensate for loss from promotional offers for retail products, particularly in the area of mortgage lending. Substantial growth in mutual fund commissions vis-à-vis Q2 2005 results from the successful restructuring in the mix of 2 mutual fund assets in favour of high value-added products (bond and equity funds) carried out last year. Lastly, despite deterioration in the conditions prevailing in the capital markets, capital market commissions also posted 33% growth compared to H1 2005. Income from insurance business also improving, growing to over €57 million, up 18% compared to H1 2005, as a result of growth in the life and group insurance portfolio and the promotion of new bancassurance products among the wide customer base of NBG. Retail banking posts dynamic growthTotal Group loans topped €32.8 billion, up 17% y-o-y. Retail lending presented spectacular growth of 26% y-o-y, and now represents over 62% of the Group’s total loan book, as compared with 58% in June 2005.
Mortgage lending continues to comprise the driving force of retail portfolio growth. In June 2006, the mortgage lending portfolio stood at €13 billion, up 30% y-o-y. In H1 2006, new loans amounting to €1,577 million were disbursed, 27% higher than in H1 2005, despite interest rate increases by the ECB in the current year. The dynamic presented by the number of mortgage loan applications in Greece (increased by 53% compared with the first half of 2005) coupled with the Bank’s drive to place and promote new pioneering products in the market, reinforce expectations of yet another successful year ahead in this lending segment. Consumer loan and credit card balances totaled €5.2 billion at the end of the first half, up 16% y-o-y. Open-end consumer loans totaled €1.3 billion up 25% y-o-y comprising the largest segment of consumer loans and thus contributing to yet stronger interest income and commissions. In H1 2006, credit card balances and commissions remained flat compared with H1 2005, in line with the signs of satiation appearing in the market in the past months. Lending to corporates and professionals grew to close €15 billion by the end of H1 2006. A key player in this growth was the domestic SME loan book (i.e. financing to professionals and businesses with turnover below €2.5 million) and medium-sized enterprises (i.e. financing to firms with turnover of €2.5-€50 million), which grew by 31% and 16% y-0-y respectively. Strong presence in Southeast EuropeNBG Group maintained its dynamic pace in the region of Southeast Europe. In the first six months of the current year, the Group’s physical presence was reinforced with the opening of 22 new units, thereby increasing the total number of branches to 279. In the context of the Group’s organic growth, a further 65 branches are due to be opened by the end of the year. Group lending in the region grew by 43% y-o-y to over €2.5 billion. Retail banking continued to constitute the driving force behind the Group’s growth, with the total retail loan book growing at around 76% on an annual basis and the Group’s market share in the region now standing at around 8%. 3 The positive course of our SE European business contributed to an enviable increase in the Group’s profitability in the region, with pre-tax profits of the SE Europe subsidiary units totaling €52 million, up 28% on an annual basis, despite increased investment and cost due to the rapid growth in the branch network. This level of profitability accounts for more than 10% of the Group’s total pre-tax profits. Deposit base growth retains overall liquidityGroup deposits grew by 5% to €45.7 billion in the first half of 2006. Time deposits posted the highest growth, as they absorbed funds from money market mutual funds in an effort to convert the latter into higher yielding placements. This indicates that the Group’s liquidity is being maintained at strong levels. The rising trend in deposits retained a low leverage in the balance sheet (loans-to-deposits ratio: 71.9%). The Group’s efficiency continues to improve
Despite the Group’s expanding business in Southeast Europe, the increase in operating expenses has been exceptionally low vis-à-vis H1 2005. In particular, staff costs (excluding voluntary retirement costs) grew by 6% to €424 million, in line with the annual pay rise provided for in the collective labour agreement. Administrative expenses and depreciation grew to €238 million, i.e. by 6% vis-à-vis H1 2005. Stringent control of expenses coupled with the impressive growth in income has led to a further improvement in the Group’s efficiency ratio, which now stands at less than 50%. Enhanced capital adequacy ensures continued growth of the GroupThe Group’s capital base strengthened yet further in H1: 2006, as reflected in its capital adequacy ratios.
The Total Tier-I Capital Adequacy ratio stands at 13.1%, up 90 basis points on the ratio for full-year 2005. Similarly, the Core Tier-I ratio stands at 9.8%, well above the minimum level required by the regulatory authorities, thereby securing for the Group a solid base on which to build its business further in Greece and Southeast Europe. 4
Group income statement
5
*excluding discontinued operations
Group deposits
*excluding discontinued operations 6
NATIONAL BANK OF GREECE S.A. Condensed Consolidated Interim Financial Statements30 June 2006 In accordance with International Financial Reporting Standards
August 2006 Table of Contents
AUDITOR’S REVIEW REPORTTo the Shareholders of NATIONAL BANK OF GREECE S.A. We have reviewed the accompanying condensed consolidated interim balance sheet of “National Bank of Greece S.A.” (the “Bank”) and its subsidiaries (the “Group”) as of 30 June 2006 and the related condensed consolidated interim statements of income, changes in shareholders equity and cash flows for the six months ended 30 June 2006. Our review was performed for the six month period as a whole, and did not include the separate review of the financial information for the three month period from 1 April to 30 June 2006, which is presented in the income statement of the accompanying condensed consolidated interim financial statements. The condensed consolidated interim financial statements are the responsibility of the Bank’s management. Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our review. We conducted our review in accordance with the International Standard on Review Engagements 2400, as required by the Greek Standards on Auditing. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the condensed consolidated interim financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements for the six monthly period ended 30 June 2006 are not presented fairly, in all material respects, in accordance with International Accounting Standard 34 “ Interim Financial Reporting”. Athens, 31 August
2006 Nicolaos C. Sofianos
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Group net profit after tax and minority interests
grew to €546 million in the first half of 2006, up 65% vis-à-vis the first half
of 2005. The Group’s profitability posted growth on a quarterly basis also, as
net profit after tax and minority interests rose to €296 million during Q2, 18%
up on Q1 2006. Q2 profit, boosted by extraordinary profit of €113 million from
completion of the sale of the Group’s subsidiaries Atlantic Bank of New York
and National Bank of Greece Canada in North America, and despite one-off
expenses of €24 million, reflecting the cost of Group subsidiaries’ voluntary
retirement programmes, posted a record high in National Bank’s history.
Group loans
|
|
|
|
6 month period ended |
|
3 month period ended |
|
|||||
|
€ 000’s |
|
Note |
|
30.06.2006 |
|
30.06.2005 |
|
30.06.2006 |
|
30.06.2005 |
|
|
Continuing Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and similar income |
|
|
|
1.372.643 |
|
1.147.683 |
|
705.486 |
|
579.570 |
|
|
Interest expense and similar charges |
|
|
|
(485.744 |
) |
(389.933 |
) |
(246.315 |
) |
(200.914 |
) |
|
Net interest income |
|
5 |
|
886.899 |
|
757.750 |
|
459.171 |
|
378.656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and commission income |
|
|
|
255.422 |
|
212.256 |
|
127.707 |
|
104.145 |
|
|
Fee and commission expense |
|
|
|
(17.428 |
) |
(13.133 |
) |
(7.384 |
) |
(7.182 |
) |
|
Net fee and commission income |
|
6 |
|
237.994 |
|
199.123 |
|
120.323 |
|
96.963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned premia net of reinsurance |
|
|
|
323.795 |
|
275.508 |
|
164.002 |
|
146.914 |
|
|
Net claims incurred |
|
|
|
(266.682 |
) |
(230.001 |
) |
(134.151 |
) |
(124.523 |
) |
|
Net premia from insurance contracts |
|
7 |
|
57.113 |
|
45.507 |
|
29.851 |
|
22.391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend income |
|
|
|
8.315 |
|
8.259 |
|
6.904 |
|
6.102 |
|
|
Net trading income |
|
|
|
13.114 |
|
(32.743 |
) |
(16.648 |
) |
(50.296 |
) |
|
Net result from investment securities |
|
17 |
|
44.520 |
|
93.476 |
|
16.652 |
|
77.498 |
|
|
Other operating income |
|
8 |
|
93.594 |
|
52.388 |
|
42.605 |
|
28.950 |
|
|
Total operating income |
|
|
|
1.341.549 |
|
1.123.760 |
|
658.858 |
|
560.264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expenses |
|
9&10 |
|
(448.265 |
) |
(399.466 |
) |
(236.433 |
) |
(201.083 |
) |
|
General & administrative expenses |
|
|
|
(167.235 |
) |
(151.859 |
) |
(90.961 |
) |
(76.606 |
) |
|
Depreciation, amortisation and impairment charges |
|
|
|
(55.543 |
) |
(57.213 |
) |
(27.459 |
) |
(28.613 |
) |
|
Other operating expenses |
|
|
|
(15.357 |
) |
(17.129 |
) |
(6.898 |
) |
(8.452 |
) |
|
Total operating expenses |
|
|
|
(686.400 |
) |
(625.667 |
) |
(361.751 |
) |
(314.754 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment losses on loans and advances |
|
11 |
|
(130.400 |
) |
(99.720 |
) |
(64.418 |
) |
(52.771 |
) |
|
Share of profit of associates |
|
19 |
|
8.328 |
|
11.434 |
|
2.824 |
|
10.639 |
|
|
Profit before tax |
|
|
|
533.077 |
|
409.807 |
|
235.513 |
|
203.378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
12 |
|
(95.478 |
) |
(76.991 |
) |
(44.637 |
) |
(27.855 |
) |
|
Profit for the period from continuing operations |
|
|
|
437.599 |
|
332.816 |
|
190.876 |
|
175.523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period from discontinued operations |
|
23 |
|
118.074 |
|
15.129 |
|
111.070 |
|
8.224 |
|
|
Profit for the period |
|
|
|
555.673 |
|
347.945 |
|
301.946 |
|
183.747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests |
|
33 |
|
9.470 |
|
17.147 |
|
5.940 |
|
10.001 |
|
|
NBG equity shareholders |
|
|
|
546.203 |
|
330.798 |
|
296.006 |
|
173.746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share- Basic & Diluted from continuing & discontinued operations |
|
13 |
|
€ 1,36 |
|
€ 0,94 |
|
€ 0,72 |
|
€ 0,49 |
|
|
Earnings per share- Basic & Diluted from continuing operations |
|
13 |
|
€ 1,03 |
|
€ 0,90 |
|
€ 0,41 |
|
€ 0,47 |
|
Athens, 30 August 2006
|
THE CHAIRMAN |
|
THE VICE CHAIRMAN AND DEPUTY CHIEF |
|
THE CHIEF FINANCIAL |
|
THE CHIEF ACCOUNTANT |
|
AND CHIEF EXECUTIVE OFFICER |
|
EXECUTIVE OFFICER |
|
AND CHIEF OPERATIONS OFFICER |
|
|
|
EFSTRATIOS-GEORGIOS |
|
IOANNIS G. PECHLIVANIDIS |
|
ANTHIMOS C. THOMOPOULOS |
|
IOANNIS P. KYRIAKOPOULOS |
The notes on pages 8 to 38 form an integral part of these condensed consolidated interim financial statements
4
Consolidated Balance Sheet
|
€ 000’s |
|
Note |
|
30.06.2006 |
|
31.12.2005 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and balances with central banks |
|
|
|
3.422.931 |
|
2.431.287 |
|
|
Treasury bills and other eligible bills |
|
|
|
338.458 |
|
177.023 |
|
|
Due from banks (net) |
|
|
|
4.252.532 |
|
4.085.204 |
|
|
Financial assets at fair value through P&L |
|
14 |
|
12.748.217 |
|
13.667.471 |
|
|
Derivative financial instruments |
|
15 |
|
327.269 |
|
309.030 |
|
|
Loans and advances to customers (net) |
|
16 |
|
31.668.252 |
|
29.528.178 |
|
|
Investment securities |
|
17 |
|
3.339.621 |
|
2.833.661 |
|
|
Investment property |
|
18 |
|
125.048 |
|
126.506 |
|
|
Investments in associates |
|
19 |
|
237.501 |
|
249.152 |
|
|
Goodwill & other intangible assets |
|
20 |
|
62.044 |
|
65.911 |
|
|
Property & equipment |
|
21 |
|
1.861.189 |
|
1.885.713 |
|
|
Deferred tax assets |
|
|
|
209.425 |
|
217.417 |
|
|
Insurance related assets and receivables |
|
|
|
701.670 |
|
637.916 |
|
|
Other assets |
|
22 |
|
1.938.026 |
|
1.479.888 |
|
|
Assets classified as held for sale |
|
23 |
|
— |
|
2.732.203 |
|
|
Total assets |
|
|
|
61.232.183 |
|
60.426.560 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Due to banks |
|
24 |
|
5.596.141 |
|
5.060.850 |
|
|
Derivative financial instruments |
|
15 |
|
436.978 |
|
302.698 |
|
|
Due to customers |
|
25 |
|
45.663.799 |
|
43.350.120 |
|
|
Debt securities in issue |
|
26 |
|
178.352 |
|
175.297 |
|
|
Other borrowed funds |
|
27 |
|
933.164 |
|
956.988 |
|
|
Insurance related reserves and liabilities |
|
28 |
|
1.833.592 |
|
1.734.249 |
|
|
Deferred tax liabilities |
|
|
|
96.817 |
|
102.359 |
|
|
Retirement benefit obligations |
|
10 |
|
220.823 |
|
207.725 |
|
|
Other liabilities |
|
29 |
|
1.903.702 |
|
1.960.701 |
|
|
Liabilities classified as held for sale |
|
23 |
|
— |
|
2.259.165 |
|
|
Total liabilities |
|
|
|
56.863.368 |
|
56.110.152 |
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Share capital |
|
31 |
|
1.696.347 |
|
1.696.347 |
|
|
Share premium account |
|
31 |
|
— |
|
— |
|
|
Less: treasury shares |
|
31 |
|
(22.610 |
) |
(22.680 |
) |
|
Reserves and retained earnings |
|
32 |
|
1.528.961 |
|
1.450.163 |
|
|
Equity attributable to NBG shareholders |
|
|
|
3.202.698 |
|
3.123.830 |
|
|
|
|
|
|
|
|
|
|
|
Minority Interest |
|
33 |
|
94.530 |
|
109.997 |
|
|
Undated tier I perpetual securities |
|
34 |
|
1.071.587 |
|
1.082.581 |
|
|
Total shareholders’ equity |
|
|
|
4.368.815 |
|
4.316.408 |
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
|
61.232.183 |
|
60.426.560 |
|
Athens, 30 August 2006
|
THE CHAIRMAN |
|
THE VICE CHAIRMAN AND DEPUTY CHIEF |
|
THE CHIEF FINANCIAL |
|
THE CHIEF ACCOUNTANT |
|
AND CHIEF EXECUTIVE OFFICER |
|
EXECUTIVE OFFICER |
|
AND CHIEF OPERATIONS OFFICER |
|
|
|
EFSTRATIOS-GEORGIOS |
|
IOANNIS G. PECHLIVANIDIS |
|
ANTHIMOS C. THOMOPOULOS |
|
IOANNIS P. KYRIAKOPOULOS |
The notes on pages 8 to 38 form an integral part of these condensed consolidated interim financial statements
5
Consolidated Statement of Changes in Equity
|
|
Attributable to equity holders of the parent company |
|
Minority |
|
|
|
|||||||||
|
€ 000’s |
|
Share |
|
Share |
|
Treasury |
|
Reserves & |
|
Total |
|
Undated |
|
Total |
|
|
At 1 January 2005 |
|
1.492.090 |
|
32.393 |
|
(210.128 |
) |
930.587 |
|
2.244.942 |
|
1.102.731 |
|
3.347.673 |
|
|
Movement in the available for sale securities reserve, net of tax |
|
— |
|
— |
|
— |
|
(34.892 |
) |
(34.892 |
) |
(1.221 |
) |
(36.113 |
) |
|
Currency translation differences |
|
— |
|
— |
|
— |
|
15.215 |
|
15.215 |
|
— |
|
15.215 |
|
|
Profit/(loss) recognised directly in equity |
|
— |
|
— |
|
— |
|
(19.677 |
) |
(19.677 |
) |
(1.221 |
) |
(20.898 |
) |
|
Net Profit/(loss) for the period |
|
— |
|
— |
|
— |
|
330.798 |
|
330.798 |
|
17.147 |
|
347.945 |
|
|
Total |
|
— |
|
— |
|
— |
|
311.121 |
|
311.121 |
|
15.926 |
|
327.047 |
|
|
Issue of preferred securities |
|
— |
|
— |
|
— |
|
(19.649 |
) |
(19.649 |
) |
246.709 |
|
227.060 |
|
|
Dividends to preferred securities |
|
— |
|
— |
|
— |
|
(6.895 |
) |
(6.895 |
) |
— |
|
(6.895 |
) |
|
Share capital issue costs |
|
— |
|
— |
|
— |
|
(1.594 |
) |
(1.594 |
) |
(742 |
) |
(2.336 |
) |
|
Dividends to ordinary shareholders |
|
— |
|
— |
|
— |
|
(192.458 |
) |
(192.458 |
) |
(11.091 |
) |
(203.549 |
) |
|
Acquisitions, disposals & share capital increases of subsidiaries/associates |
|
— |
|
— |
|
— |
|
1.084 |
|
1.084 |
|
11.702 |
|
12.786 |
|
|
Purchases/ disposals of treasury shares & preferred securities |
|
— |
|
— |
|
(2.681 |
) |
91 |
|
(2.590 |
) |
108 |
|
(2.482 |
) |
|
Balance at 30 June 2005 |
|
1.492.090 |
|
32.393 |
|
(212.809 |
) |
1.022.287 |
|
2.333.961 |
|
1.365.343 |
|
3.699.304 |
|
|
At 1 July 2005 |
|
1.492.090 |
|
32.393 |
|
(212.809 |
) |
1.022.287 |
|
2.333.961 |
|
1.365.343 |
|
3.699.304 |
|
|
Movements from 1.7.2005 to 31.12.2005 |
|
204.257 |
|
(32.393 |
) |
190.129 |
|
427.876 |
|
789.869 |
|
(172.765 |
) |
617.104 |
|
|
Balance at 31 December 2005 |
|
1.696.347 |
|
— |
|
(22.680 |
) |
1.450.163 |
|
3.123.830 |
|
1.192.578 |
|
4.316.408 |
|
|
At 1 January 2006 |
|
1.696.347 |
|
— |
|
(22.680 |
) |
1.450.163 |
|
3.123.830 |
|
1.192.578 |
|
4.316.408 |
|
|
Movement in the available for sale securities reserve, net of tax |
|
— |
|
— |
|
— |
|
(88.729 |
) |
(88.729 |
) |
(7.764 |
) |
(96.493 |
) |
|
Currency translation differences |
|
— |
|
— |
|
— |
|
12.846 |
|
12.846 |
|
(10.956 |
) |
1.890 |
|
|
Cash flow hedges |
|
— |
|
— |
|
— |
|
(195 |
) |
(195 |
) |
— |
|
(195 |
) |
|
Profit/(loss) recognised directly in equity |
|
— |
|
— |
|
— |
|
(76.078 |
) |
(76.078 |
) |
(18.720 |
) |
(94.798 |
) |
|
Net Profit/(loss) for the period |
|
— |
|
— |
|
— |
|
546.203 |
|
546.203 |
|
9.470 |
|
555.673 |
|
|
Total |
|
— |
|
— |
|
— |
|
470.125 |
|
470.125 |
|
(9.250 |
) |
460.875 |
|
|
Dividends to preferred securities |
|
— |
|
— |
|
— |
|
(53.927 |
) |
(53.927 |
) |
— |
|
(53.927 |
) |
|
Dividends to ordinary and minority shareholders |
|
— |
|
— |
|
— |
|
(338.558 |
) |
(338.558 |
) |
(11.385 |
) |
(349.943 |
) |
|
Acquisitions, disposals & share capital increases of subsidiaries/associates |
|
— |
|
— |
|
— |
|
1.316 |
|
1.316 |
|
(5.826 |
) |
(4.510 |
) |
|
Purchases/ disposals of treasury shares & preferred securities |
|
— |
|
— |
|
70 |
|
(158 |
) |
(88 |
) |
— |
|
(88 |
) |
|
Balance at 30 June 2006 |
|
1.696.347 |
|
— |
|
(22.610 |
) |
1.528.961 |
|
3.202.698 |
|
1.166.117 |
|
4.368.815 |
|
Analysis of the changes in equity is presented in notes 31 to 34 of these financial statements
The notes on pages 8 to 38 form an integral part of these condensed interim financial statements
6
Consolidated Cash Flow Statement
|
|
|
|
6-month period ended |
|
|||
|
€ 000’s |
|
Note |
|
30.06.2006 |
|
30.06.2005 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Profit for the period from continuing operations |
|
|
|
437.599 |
|
332.816 |
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
Non-cash items included in profit and other adjustments: |
|
|
|
124.122 |
|
33.390 |
|
|
Depreciation, amortisation & impairment on fixed assets & invest. property |
|
|
|
55.543 |
|
57.213 |
|
|
Impairment losses on investments |
|
|
|
273 |
|
— |
|
|
Amortisation of premiums/discounts of investment securities |
|
|
|
5.908 |
|
(4.274 |
) |
|
Credit loss expense / (recovery) |
|
|
|
130.401 |
|
99.720 |
|
|
Equity income of associates |
|
|
|
(8.328 |
) |
(11.434 |
) |
|
Deferred tax expense / (benefit) |
|
|
|
11.084 |
|
(7.393 |
) |
|
Dividend income from investment securities |
|
|
|
(6.578 |
) |
(3.358 |
) |
|
Net (profit) / loss on sale of fixed assets & investment property |
|
|
|
(19.388 |
) |
(3.608 |
) |
|
Net (income) / expense on investment securities |
|
|
|
(44.793 |
) |
(93.476 |
) |
|
|
|
|
|
|
|
|
|
|
Net (increase) / decrease in operating assets: |
|
|
|
1.498.399 |
|
1.058.880 |
|
|
Net due from / to banks |
|
|
|
888.365 |
|
3.030.249 |
|
|
Financial assets & liabilities at fair value through P&L |
|
|
|
897.690 |
|
(1.630.360 |
) |
|
Acquisition of treasury bills and other eligible bills |
|
|
|
(64.580 |
) |
— |
|
|
Proceeds from sale of treasury bills and other eligible bills |
|
|
|
— |
|
17.350 |
|
|
Net derivative financial instruments |
|
|
|
125.772 |
|
80.681 |
|
|
Net loans and advances to customers / due to customers |
|
|
|
44.196 |
|
(282.038 |
) |
|
Other assets |
|
|
|
(393.044 |
) |
(157.002 |
) |
|
|
|
|
|
|
|
|
|
|
Net increase / (decrease) in operating liabilities: |
|
|
|
28.821 |
|
(206.616 |
) |
|
Income taxes paid |
|
|
|
(156.115 |
) |
(50.730 |
) |
|
Other liabilities |
|
|
|
184.936 |
|
(155.886 |
) |
|
Net cash flow from / (used in) operating activities from continuing operations |
|
|
|
2.088.941 |
|
1.218.470 |
|
|
Net cash flow from / (used in) operating activities from discontinued operations |
|
|
|
(2.268 |
) |
38.848 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Acquisition of subsidiaries, net of cash acquired |
|
|
|
(3.635 |
) |
(3.887 |
) |
|
Disposals of subsidiaries, net of cash disposed |
|
|
|
358.215 |
|
— |
|
|
Acquisitions of associates, net of cash |
|
|
|
(850 |
) |
(435 |
) |
|
Disposals of associates, net of cash |
|
|
|
252 |
|
1.139 |
|
|
Dividends received from investment securities & associates |
|
|
|
27.155 |
|
8.315 |
|
|
Purchases of fixed assets |
|
|
|
(49.363 |
) |
(47.866 |
) |
|
Proceeds from sale of fixed assets |
|
|
|
39.207 |
|
39.552 |
|
|
Purchases of investment property |
|
|
|
(1.106 |
) |
(269 |
) |
|
Proceeds from sale of investment property |
|
|
|
886 |
|
1.961 |
|
|
Cash flow hedging instruments |
|
|
|
(10.812 |
) |
— |
|
|
Purchases of investment securities |
|
|
|
(1.182.827 |
) |
(1.154.631 |
) |
|
Proceeds from redemption and sale of investment securities |
|
|
|
612.150 |
|
1.207.310 |
|
|
Net cash from / (used in) investing activities from continuing operations |
|
|
|
(210.728 |
) |
51.189 |
|
|
Net cash from / (used in) investing activities from discontinued operations |
|
|
|
286 |
|
(16.188 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from borrowed funds and debt securities |
|
|
|
— |
|
454.100 |
|
|
Repayments of borrowed funds and debt securities |
|
|
|
(7.096 |
) |
(23.526 |
) |
|
Proceeds from sale of treasury shares |
|
|
|
12.471 |
|
4.292 |
|
|
Repurchase of treasury shares |
|
|
|
(12.488 |
) |
(6.882 |
) |
|
Dividends to ordinary shareholders |
|
|
|
(338.558 |
) |
(176.802 |
) |
|
Dividends to preferred securities |
|
|
|
(31.127 |
) |
(6.895 |
) |
|
Minority interest |
|
|
|
(10.034 |
) |
7.032 |
|
|
Net cash from / (used in) financing activities from continuing operations |
|
|
|
(386.832 |
) |
251.319 |
|
|
Net cash from / (used in) financing activities from discontinued operations |
|
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
|
(24.026 |
) |
109.082 |
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
|
1.465.373 |
|
1.652.720 |
|
|
Cash and cash equivalents at beginning of period from continuing operations |
|
|
|
3.127.260 |
|
4.930.174 |
|
|
Less: cash & cash equivalents at period end from discontinued operations |
|
|
|
— |
|
(60.430 |
) |
|
Cash and cash equivalents at end of period |
|
36 |
|
4.592.633 |
|
6.522.464 |
|
The notes on pages 8 to 38 form an integral part of these condensed consolidated interim financial statements
7
Notes to the Condensed Consolidated Interim Financial Statements
NOTE 1: General Information
National Bank of Greece S.A. (hereinafter the “Bank”) was founded in 1841 and has been listed on the Athens Stock Exchange since 1880. The Bank has further listing in the New York Stock Exchange (since 1999), and in other major European stock exchanges. The Bank’s headquarters are located at 86 Eolou Street, (Reg. 6062/06/B/86/01), tel.: (+30) 210 334 1000. By resolution of the Board of Directors the Bank can establish branches, agencies and correspondence offices in Greece and abroad. In its 165 years of operation the Bank has expanded on its commercial banking business by entering into related business areas. National Bank of Greece and its subsidiaries (hereinafter the “Group”) provide a wide range of financial services including retail and commercial banking, asset management, brokerage, investment banking, insurance and real estate on a global level. The Group operates primarily in Greece, but also has operations in UK, SE Europe, Cyprus, Egypt, South Africa and North America (discontinued operations).
The Board of Directors consists of the following members:
|
Executive Members |
|
|
|
Efstratios-Georgios (Takis) A. Arapoglou |
|
Chairman - Chief Executive Officer |
|
Ioannis G. Pechlivanidis |
|
Vice Chairman- Deputy Chief Executive Officer |
|
|
|
|
|
Non-Executive Members |
|
|
|
George M. Athanasopoulos |
|
Employees’ representative |
|
John P. Panagopoulos |
|
Employees’ representative |
|
Ioannis C. Yiannidis |
|
Professor, University of Athens Law School |
|
|
|
|
|
Independent Non-Executive Members |
|
|
|
|
|
|
|
H.E. the Metropolitan of Ioannina Theoklitos |
|
|
|
Stefanos C. Vavalidis |
|
Member of the Board of Directors, European Bank for Reconstruction & Development |
|
Dimitrios A. Daskalopoulos |
|
Chairman and Managing Director, Delta S.A., Chairman, Federation of Greek Industrialists |
|
Nikolaos D. Efthymiou |
|
Chairman, Association of Greek Shipowners |
|
George Z. Lanaras |
|
Shipowner |
|
Stefanos G. Pantzopoulos |
|
Business Consultant, former Certified Auditor |
|
Constantinos D. Pilarinos |
|
Economist, General Manager of Finances and Technical Services, Church of Greece |
|
Drakoulis K. Fountoukakos-Kyriakakos |
|
Entrepreneur |
|
Ioannis Vartholomeos |
|
Professor, University of Piraeus, Governor of IKA (Social Security Fund) |
|
Ploutarchos K. Sakellaris |
|
Professor, University of Athens, and Chairman, Council of Economic Advisors. |
Directors are elected by the shareholders at their general meeting (GM) for a term of three years and may be re-elected. The term of the above members expires in 2007.
These condensed consolidated interim financial statements have been approved for issue by the Bank’s Board of Directors, on 30 August 2006.
8
2.1 Basis of presentation-Statement of compliance
The condensed consolidated interim financial statements of the Group (the “ interim financial statements”) have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards (collectively, IFRS) whereas International Accounting Standard 34 “Interim Financial Reporting” has been applied for the preparation of these Group’s interim consolidated financial statements as at and for the period ended 30 June 2006. The interim financial statements include Selected Explanatory Notes and they do not include all the information required for full annual consolidated financial statements. Therefore, the interim financial statements should be read in conjunction with the annual consolidated financial statements as at and for the year ended 31 December 2005. The amounts are stated in Euro, rounded to the nearest thousand (unless otherwise stated).
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Use of available information and application of judgment are inherent in the formation of estimates in the following areas: valuation of OTC derivatives, unlisted securities, retirement benefits obligation, insurance reserves, impairment of loans and receivables, open tax years and litigation. Actual results in the future could differ from such estimates and the differences may be material to the financial statements.
In preparing these interim financial statements, the significant estimates, judgements and assumptions made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated annual financial statements as at and for the year ended 31 December 2005.
However, owing to a specific interpretative approach adopted by the Group upon preparing of its 2005 interim financial statements, certain items reflected in the interim financial statements needed restatement. Therefore, although all the interim financial statements for the year 2005 incorporated the same accounting treatments as those that applied to the first annual IFRS financial statements as at and for the year ended 31 December 2005, the interim financial statements for the 6-month period ended 30 June 2005 should be restated for consistency. Furthermore, following the decision of the Group to sell its operations in North America, namely Atlantic Bank of New York and NBG Canada late in 2005, the comparative figures for 2005 should also be adjusted to reflect the results of operations from the discontinued operations. The restated financial statements are presented in note 41. The comparative figures used in these interim financial statements are the restated ones.
2.2 Adoption of International Financial Reporting Standards (IFRS) effective from 1 January 2006
The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated annual financial statements as at and for the year ended 31 December 2005.
The new standards, amendments and interpretations to existing standards that are mandatory for the Group’s accounting periods beginning on 1 January 2006 are as follows:
· IAS 19 (Amendment), “Employee Benefits” (effective from 1 January 2006).
This amendment introduces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not currently participate in any multi-employer plans, adoption of this amendment has only impacted the format and extent of disclosures presented in the accounts.
· IAS 39 (Amendment), “Cash Flow Hedge Accounting of Forecast Intragroup Transactions” (effective from 1 January 2006). The amendment allows the foreign currency risk of a highly probable forecast intragroup transaction to qualify as a hedged item in the consolidated financial statements, provided that: (a) the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction; and (b) the foreign currency risk will affect consolidated profit or loss. This amendment has not had a significant
9
impact on the Group’s financial position, as the Group does not have any intragroup transactions that would qualify as a hedged item in the consolidated financial statements as of 30 June 2006 and 31 December 2005.
· IAS 39 and IFRS 4 (Amendment), “Financial Guarantee Contracts” (effective from 1 January 2006). This amendment requires issued financial guarantees, other than those previously asserted by the entity to be insurance contracts, to be initially recognised at their fair value and subsequently measured at the higher of: (a) the unamortised balance of the related fees received and deferred, and (b) the expenditure required to settle the commitment at the balance sheet date. This amendment did not have a significant impact on the Group’s financial position.
· IFRIC 4, “Determining whether an Arrangement contains a Lease” (effective from 1 January 2006). IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. Management assessed the impact of IFRIC 4 and this amendment had a limited impact to the format and extent of disclosures presented in the accounts on the Group’s operations.
· IAS 21 (Amendment), “Net investment in a foreign operation” (effective from 1 January 2006). This amendment requires that when a monetary item forms part of a reporting entity’s net investment in a foreign operation and is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, the exchange differences that arise in the individual financial statements of both companies are reclassified to equity upon consolidation. This amendment did not have a significant impact on the Group’s financial position.
The following new standards, amendments to standards and interpretations have been issued but are not effective for 2006 and have not been early adopted:
· IFRS 7, “Financial Instruments: Disclosures”, and a complementary amendment to IAS 1, “Presentation of Financial Statements – Capital Disclosures” (effective from 1 January 2007). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces IAS 30, “Disclosures in the Financial Statements of Banks and Similar Financial Institutions”, and disclosure requirements in IAS 32, “Financial Instruments: Disclosure and Presentation”. It is applicable to all entities that report under IFRS. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and how it manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of IAS 1. The Group intends to apply IFRS 7 and the amendment to IAS 1 from annual periods beginning 1 January 2007.
· IFRIC 7, ‘Applying the Restatement Approach under IAS 29 “Financial Reporting in Hyperinflationary Economies”, effective for annual periods beginning on or after 1 March 2006. Management does not expect the interpretation to be relevant for the Group;
· IFRIC 8, ‘Scope of IFRS 2 “ Share Based Payments”, effective for annual periods beginning on or after 1 May 2006. Management is currently examining the share based scheme adopted and will assess the impact of IFRIC 8 on this scheme;
· IFRIC 9, ‘Reassessment of Embedded Derivatives’, effective for annual periods beginning on or after 1 June 2006. Management is currently evaluating the impact of the new IFRIC; and
· IFRIC 10, Interim Financial Reporting and Impairment, effective for annual periods beginning on or after 1 November 2006. The Group will apply the new IFRIC from 2007.
10
The Bank is subject to various regulatory capital requirements administered by the central bank. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios determined on a risk-weighted basis, capital (as defined) to assets, certain off-balance sheet items, and the notional credit equivalent arising from the total capital requirements against market risk, of at least 8%. At least half of the required capital must consist of ‘‘Tier I’’ capital (as defined), and the rest of ‘‘Tier II’’ capital (as defined). The framework applicable to Greek banks conforms to European Union requirements, in particular the Own Funds, the Solvency Ratio and the Capital Adequacy Directives. However, under the relevant European legislation, supervisory authorities of the member-states have some discretion in determining whether to include particular instruments as capital guidelines and to assign different weights, within a prescribed range, to various categories of assets.
Capital adequacy (amounts in € million)
|
|
30.06.2006 |
|
31.12.2005 |
|
|
|
Capital: |
|
|
|
|
|
|
Upper Tier I capital |
|
3.134 |
|
2.844 |
|
|
Lower Tier I capital |
|
1.072 |
|
1.083 |
|
|
Deductions |
|
(57 |
) |
(72 |
) |
|
Tier I capital |
|
4.149 |
|
3.855 |
|
|
Upper Tier II capital |
|
(48 |
) |
(49 |
) |
|
Lower Tier II capital |
|
933 |
|
965 |
|
|
Deductions |
|
(13 |
) |
(14 |
) |
|
Total capital |
|
5.021 |
|
4.757 |
|
|
|
|
|
|
|
|
|
Risk weighted assets: |
|
|
|
|
|
|
On Balance sheet (investment book) |
|
28.039 |
|
27.864 |
|
|
Off Balance sheet (investment book) |
|
2.233 |
|
2.083 |
|
|
Trading portfolio |
|
1.303 |
|
1.360 |
|
|
Total risk weighted assets |
|
31.575 |
|
31.307 |
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
Core |
|
9,8 |
% |
8,9 |
% |
|
Tier I |
|
13,1 |
% |
12,3 |
% |
|
Total |
|
15,9 |
% |
15,2 |
% |
As at 30 June 2006, the capital base of the NBG Group computed using Bank of Greece rules (“BoG”) was €5.021 million. Therefore the capital base surplus, over the 8% of risk-weighted assets required by the BoG rules was €2.495 million.
Credit Ratings
The table below sets forth the credit ratings that have been assigned to the Bank by Moody’s Investors Service Limited (referred to below as ‘‘Moody’s’’), Standard and Poor’s Rating Services (referred to below as ‘Standard and Poor’s’’), Fitch Ratings Ltd. (referred to below as ‘‘Fitch’’) and Capital Intelligence Ltd. (referred below as (Capital Intelligence). All credit ratings have been recently affirmed and/or upgraded.
|
Rating Agency |
|
Long term |
|
Short term |
|
Financial |
|
Outlook |
|
Moody’s |
|
A2 |
|
P-1 |
|
C |
|
Stable |
|
Standard & Poor’s |
|
BBB+ |
|
A-2 |
|
- |
|
Stable |
|
Fitch |
|
A- |
|
F2 |
|
B/C |
|
Stable |
|
Capital Intelligence |
|
A |
|
A1 |
|
A |
|
Stable |
11
NBG Group manages its business through the following business segments:
· Retail banking
Retail banking includes all individuals (retail banking customers) of the Bank, professionals, small-medium and small sized companies (companies with annual turnover of up to 2,5 million euros). The Group, through its extended network of branches, offers to its retail customers a number of types of deposit and investment products as well as a wide range of traditional services and products.
· Corporate & Investment banking
Corporate & Investment banking includes lending to all large and medium-sized companies, shipping finance and investment banking activities. The Group offers its corporate customers a wide range of products and services, including financial and investment advisory services, deposit accounts, loans (denominated in both euro and foreign currency), foreign exchange and trade service activities.
· Global Markets and Asset management
Global Markets and Asset management includes all treasury activities, private banking, asset management (mutual funds and closed end funds), custody services and brokerage.
· Insurance
The Group offers a wide range of insurance products through its subsidiary company, Ethniki Hellenic General Insurance Company and its local and foreign subsidiaries.
· International
The Group’s international banking activities include a wide range of traditional commercial banking services, such as extensions of commercial and retail credit, trade financing, foreign exchange and taking of deposits. In addition, the Group offers shipping finance, investment banking and brokerage services through certain of its foreign branches and subsidiaries. This segment includes the results of the operations for NBG Canada and Atlantic Bank of New York (ABNY) for the period ended 30 June 2005, and the results of the operations for ABNY and the gain on sale of NBG Canada for the period ended 30 June 2006 both reclassified under profit from discontinued operations. Accordingly, included in this segment are the assets and liabilities classified as held for sale of ABNY (31 December 2005 both ABNY and NBG Canada).