For the 5th consecutive quarter, organic operational profitability was demonstrated by Attica Bank. The business growth achieved in 2023 continues with another quarter of positive credit expansion and growth also in 2024.
In particular, the Bank reported a significant improvement across all operating lines across the Group’s organic sizes, with recurring operating profits (before provisions) of €8.7 million in the first quarter of 2024, compared to profits of €0.5 million in the corresponding period of 2023, mainly due to increased interest income and the continued reduction of the cost base in the context of the implementation of its Business Plan.
According to Attica Bank, the results are fully aligned with management’s objectives and strategy and lay the foundations for its dynamic development in the banking market and for achieving the year’s objectives. Attica Bank continued to improve all key financial indicators, with an emphasis on operational profitability through diversification of revenue sources, rationalization of operating costs and careful management of credit risk.
The Bank recorded a notable increase in recurring operating income on an annual basis of 138%, which amounted to €25.3 million compared to €18.3 million in the corresponding comparative period, driven mainly by the favourable interest rate environment, as well as the notable evolution of credit expansion also during the first quarter of 2024, confirming the Bank’s dynamism and repositioning in the market.
Recurring net profit on a year-on-year basis improved by 36.3% respectively, as a result of new disbursements as well as the increase in interest income from loans and customer receivables. The increase was offset by the significantly higher cost of financing the Bank’s operations compared to the comparative period of 2023, as a result of the adjustment of deposit products to the new market interest rates. Thus, net commission income stood at 3.1 million euros, an increase of 78% compared to the same period of the previous year, mainly driven by the increase in production, expansion of operations and emphasis on the issuance of letters of guarantee. General recurring operating expenses decreased by 7% on a year-on-year basis, as Management remains committed to retaining and reducing operating costs and to the optimal use of the Bank’s own resources.
Grants before provisions amounted to €3.63 billion in the period under review, while new disbursements also accelerated during the first quarter of 2024 and amounted to €295 million, of which €283 million relate to corporate banking and 12 million euros for retail banking. The expansion of net credit resulted mainly from loans to companies in which the Bank invests as part of the implementation of its Business Plan and amounted to 171 million euros, signaling a better growth rate compared to the market as a whole, which showed an expansion of 156 million euros. The percentage of new disbursements relating to small and medium-sized companies amounted to 97 million euros, which corresponds to 33% of new loans. The Bank’s objective is to continue to invest in traditional Greek small and medium-sized companies, gradually increasing the percentage of revenue from this category of customers, while enriching the products available.
Attica Bank maintains sufficient liquidity with the Group’s total deposits reaching 3.1 billion euros in the first quarter of 2024, with the liquidity coverage ratio (LCR) reaching 268.6%. The strong liquidity profile is also reflected in the Group’s transformation ratio (before provisions), which reached 47.6% (excluding securitizations).
As part of its capital reinforcement plan, the Bank also sold properties in the first quarter of 2024, generating profits of 3.3 million euros. Including the impact of the deconsolidation of these properties, the capital gain resulting from the sales of 2023 and the first quarter of 2024 is expected to be around 65 basis points. In terms of capital adequacy, the CET1 ratio reached 10.8% on a quarterly basis, due to the accounting adjustments of the transitional provisions of IFRS 9 and the strong credit expansion that also occurred in the first quarter of the year.
The Group’s Non-Performing Exposures (MEAs) increased by 12% quarter-on-quarter, driven by the transfer of older loans from the Bank’s legacy portfolio to MEA status, in the context of the Bank’s final balance sheet consolidation and transparency. Excluding legacy portfolio allocations, the MEA ratio stood at 54.2%, down 270 basis points quarter-on-quarter and 11.6 percentage points year-on-year. It is noted that delinquency rates on new production for loans disbursed from 2021 onwards are below 1%.
With regard to the Bank’s strategic planning, the continued consolidation of the balance sheet will be examined in parallel with the definitive inclusion of part of its AMAs in the “Heracles III” guarantee program, at the same time as preparatory actions for the possible merger with Pankritia Bank, regarding which no decision has yet been taken by the Bank’s competent bodies. Any decision by management to belong to the “Heracles III” program will be taken based on the assessment of the impact it will have on the Bank’s results and only on the condition that any impact is offset by other corresponding capital reinforcement actions. as a result of the agreement between the Bank’s main shareholders.
Attica Bank CEO Eleni Vrettou said: “2023 was the year in which the Bank returned to operational profitability, while the trend continues dynamically in 2024, as reflected in the first quarter results. The positive credit expansion in a market that basically evolved negatively in the first quarter confirms not only the Bank’s dynamics, but also its commercial appeal, together with the need for more customer alternatives in the Greek banking system.
Strategically, after achieving increasing profitability, our objective continues to be the consolidation, expansion and complete modernization of the Bank with high liquidity and a satisfactory capital base. In this sense, we hope to obtain a definitive shareholders’ agreement in the immediate future that will allow us to continue with our planning both for the possible inclusion of the Bank in the “Heracles III” plan, and for the completion of the merger with Pankritia Bank and subsequent recapitalization. Our main ambition is that the 5th banking pillar under construction puts the customer back at the center and better serves them, regardless of their size, improving their banking experience not only digitally, but also substantively, thanks to immediacy and flexibility.
We practically support the growth and modernization of Greek companies and the transition of the Greek economy to a new, sustainable, digital and extroverted development model, making the Bank itself an example of this transition.”