AstroBank reports strong profitability for 2022

AstroBank reported strong profitability for the year ending 31 December, 2022. Net income reached €12.2m increasing common shareholders’ equity to €203.7m. AstroBank’s profitability represents a 6.2% return on average equity, while capital adequacy ratio stands at 18%. Net income excluding non-recurring items stood at €21.7m.

On the occasion of the 2022 full year results announcements, Aristidis Vourakis, AstroBank CEO noted:

“The systematic efforts of AstroBank during the last two years towards a focused business model, streamlined operations, and resolution of legacy issues, have supported very strong financial results. With capital of over

€200 million, extensive presence across the country, and an updating digital offering AstroBank stands to play a central role serving Cyprus entities and individual customers”.

Income Statement Analysis and Profitability

AstroBank reported net income for the year 2022 of €12.2m. This compares with €3.3m for the year 2021. Excluding non-recurring items of €9.5m, consisting of €7.6m of Servicer‘s Settlement Fees and

€1.9m Voluntary Retirement Scheme Costs (€0.7m for 2021), Profit for the year stands at €21.7m vs. €3.9m. Reported net income represents a return on average equity of 6.2% vs. 1.7% the year 2021.

Total operating income was reduced from €74.2m to €72.7m representing a 2% reduction. Increase of 6.5% in net interest income from €48.1m to €51.2m and largely stable net fee income of €16.9m have been offset by a decline in other income from €9.1m to €4.6m. The reduction mainly reflects the gains from Byblos Branch acquisition in 2021 and investment valuation adjustments in 2022.

Total operating expenses declined from €56.1m in 2021 to €49.6m in 2022 representing a reduction of 11.8%. The reduction mainly reflects the elimination of servicer administration fees as a result from the acquisition of NPE Servicer and is partially offset by increase in other administrative costs. Employee costs have remained stable despite the impact of annual increment increase as a result of overall cost control efforts. Depreciation remained on a downward trend.

Pre-provision income stood at €23.1m in 2022 vs. €18.0m in 2022. Provisions and valuation adjustments stood at €3.7m vs. €13.4m the year before reflecting improving recoveries from the Bank’s Non-performing exposures. €2.7m deferred tax asset in relation to prior year losses has been recognised in 2022 supported by the improving underlying profitability of the Bank.

Balance Sheet Dynamics and Business Activity

AstroBank's total assets as of December 31, 2022 amounted to €2,726m, reduced from €3,018m in 2021, mainly attributed to the partial repayment of the funding from European Central Bank through the TLTRO programme by c.€200m.

Net loan balances after provisions decreased from €1,137m as of December 31, 2021 to €1,091m as of December 31, 2022 reflecting the significant resolutions in the non-performing portfolio. Total new lending granted for the period reached approximately €165m. Sustained new lending to companies and individuals in Cyprus reflects AstroBank’s strong commitment to Cyprus economy and its strong financial position facilitating new business activity.

Customer deposits declined to €2.11b vs. €2.19b a year earlier reflecting movements of deposits in the prevailing rising interest rates environment.

Underpinned by common equity of €203.7m the Bank's capital adequacy ratio improved to 17.96% in 2022, up from 16.58% in the previous year, due to internal capital generation through profitability and significant resolution of non-performing loans. Core Tier 1 ratio, consisting exclusively of common equity, stood as of December 31, 2022 at 16.54%, reflecting strong capital contributions to AstroBank of c.€115m since 2017.

AstroBank's liquidity remained robust throughout the year, with a liquidity coverage ratio of 281% at the end of 2022 and a stable loan-to-deposit ratio of 52%. The Bank also maintained direct liquidity and liquid treasury assets of c.€1.4b.

NPE ratio reduced to 19.5% as of December 31, 2022 from 25.6% as of December 31, 2021. Provision coverage remained stable at 45%. Completed disposals of Real Estate Owned Assets (REOs) reached €33.4m, with cumulative sales over the last two years amounted to €62.4m. It is noted that AstroBank resolves NPEs on an organic basis without portfolio sales.

Other Developments During the Year

AstroBank acquired on October 7th, 2022 the 74.9% interest it has sold in ex - QQuant Master Servicer Cyprus Limited, the entity that was managing NPE resolutions and REO sales. The transaction required a €13 million total consideration whose cost is fully reflected in the financial statements and capital position as of December 31, 2022. AstroBank proceeded with the internalisation of the servicer activity to realise significant cost synergies and closer integration of the operation with that of AstroBank itself.

In December 2022 AstroBank issued €5.2m and US$9.8m senior preferred bonds with a final maturity of 2 years that are eligible towards the Bank’s MREL requirements. The bonds are listed on the Cyprus Stock Exchange.

ESG and Digital Transformation

The Bank is committed to operate in an economically and socially sustainable manner. An ESG working plan has been established with significant improvements in the Governance Pillar and an expanding effort on the Environmental Pillar accompanying AstroBank’s already strong Social Pillar commitment. An extensive suites of environmentally friendly loan products along with a plan towards scope 1 and 2 emissions reduction and full integration of enviromental agenda on the Bank’s business model form the core of the environmental pillar.

AstroBank’s remains committed to quality and efficient delivery of its services to its corporate and retail clients fully utilising the functionalities allowed by Digital Transformation. In Q4 2023 a number of new initiatives will be in production including a new mobile app and internet based digital channel and full digitization of the Bank’s card offering. Those initiatives accompany a range of digitisation and integration of internal process releasing client facing capacity. With the integrated new digital platforms and its 15 locations strong network AstroBank aims to play a key role in the Cyprus banking sector.