The Laiki Bank Group has announced its financial results for the first three months of 2012, recording a net profit of 54,8 million euro, which is reduced in comparison to the first quarter of 2011 when it stood at 71 million.

According to a press release by the Laiki Bank Group, “in an especially adverse economic and business environment, the Group for the quarter ended 31 March, 2012 announces an operating profit before provisions of 96 m in first quarter 2012 versus 21 m in fourth quarter 2011 and 107 m in first quarter 2011, adjusted for the profit on disposal of subsidiary companies”.

Total operating income reached 247 m, up by 25% compared to the last quarter of 2011, while total operating expenses reached 148 m, down by 16% compared to the last quarter of 2011 and 6% on a yearly basis.

The total Group provisions rose to 119 m compared with 78 m in the respective period of 2011.

Total net loans reached 24 bn, 2% lower compared with 31 December, 2011 and total deposits were 20 bn, at the same level as 31 December, 2011.

The Group announced total net profit of 54,8 m, which includes a 84,7 m, deferred tax benefit.

In late February 2012, the Laiki Bank Group announced a comprehensive capital enhancement plan which is currently in progress.

More specifically, the prospectus for the 1,8 bn rights issue has been approved and it states that the issue is fully underwritten by the Republic of Cyprus.

It is also stated that the management of the Group’s loan portfolio has already led to a 9% annual decrease of the Group’s risk weighted assets.

“The successful completion of the entire capital plan is expected to drive total proforma regulatory capital to 2,6 bn at 31 March, 2012. The proforma EBA eligible core tier I ratio is expected to reach 9,2%, while tier I ratio is expected to reach 10,2% and total capital adequacy ratio 10,3%, rendering the Group’s capital position fully compliant with EBA regulatory requirements” the Group announces.

As regards revenues and operating expenses, in the first quarter 2012 total operating revenues stood at 247 m. versus 198 m in the fourth quarter 2011, 25% higher on a quarterly basis. On a yearly basis total operating revenues adjusted for the profit from the disposal of subsidiary companies were 7,5% lower.

Net interest income (NII) decreased by 2% on a yearly basis and by 14% on a quarterly basis to 177 m. in the first quarter of 2012, reflecting the deleveraging of the loan portfolio in all geographic areas where the Group has a presence and also the deterioration of the deposit spread in Greece and Cyprus.

Fee and commission income amounted to 40 m for the first quarter of 2012, 13% lower on a yearly basis and 9% lower on a quarterly basis compared with fourth quarter 2011. ”Subdued activity in the capital markets and banking arena are the main reasons for the decline in income from fees and commissions”, it is explained.

“The cost containment programme that the Group is currently implementing has started to deliver significant results”, the announcement says.

Total operating expenses for the first quarter 2012 stood at 148 m, 6% lower on a yearly basis and 16% lower on a quarterly basis. Staff costs at Group level amounted to 89 m in first quarter 2012, compared to 97 m in first quarter 2011 and 103 m in fourth quarter 2011. The effective containment of staff costs translates into an 8% decrease on an annual basis and 13% on a quarterly basis.

The aforementioned actions resulted in a decrease of cost-to-income ratio on a quarterly basis from 89.4% in the fourth quarter of 2011 to 60% in the first quarter of 2012. “Attempts to reduce costs and extensive cost control is a priority of Group Management and is expected to bring improved results in the coming quarters”, the Group adds.

At the end of the first quarter of 2012 profit before provisions stood at 96m versus 21 m in the fourth quarter of 2011 and 107 m in the first quarter of 2011 adjusted for the profit on disposal of subsidiary companies.

Net profit of the Group, including an additional deferred tax asset 84,7 m relating to the tax benefit to arise from the tax deductibility of impairment of Greek Government Bonds in the future, amounted to 55 m in the first quarter of 2012, 23% lower compared with 71 m in first quarter 2011.

The Group’s net loan portfolio decreased by 5% on an annual basis and by 2% on a quarterly basis and amounted to 24,3 bn on 31 March, 2012.

Deposits remained unchanged on a quarterly basis and amounted to 20 bn in the first quarter of 2012. On a yearly basis deposits decreased by 16%, mainly due to the reduction in deposits in the Greek market.

Cyprus Weekly

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