AstroBank released its financial results for the year to December 31, 2022, reporting increased profitability.
In a press release, the bank said that its net income reached €12.2 million, increasing common shareholders’ equity to €203.7 million. AstroBank’s profitability represents a 6.2% return on average equity, while its capital adequacy ratio stands at 18%.
Also, net income excluding non-recurring items stood at €21.7 million.
“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,” Aristidis Vourakis, AstroBank’s CEO said.
Income Statement Analysis and Profitability
AstroBank’s reported net income of €12.2 million, compares is higher than the €3.3 million for the year 2021. This represents a return on average equity of 6.2% vs. 1.7% in 2021.
Also, according to the bank, total operating income was reduced from €74.2 million to €72.7 million, representing a 2% reduction. An increase of 6.5% in net interest income from €48.1 million to €51.2 million and largely stable net fee income of €16.9 million have been offset by a decline in other income from €9.1 million to €4.6 million.
“The reduction mainly reflects the gains from Byblos Branch acquisition in 2021 and investment valuation adjustments in 2022,” the press release noted.
Furthermore, total operating expenses declined from €56.1 million in 2021 to €49.6 million 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,” the bank said.
Employee costs remained stable despite the impact of annual increment increase as a result of overall cost control efforts, while depreciation remained on a downward trend.
Balance Sheet Dynamics and Business Activity
AstroBank’s total assets as of December 31, 2022, amounted to €2,726 million, reduced from €3,018 million in 2021, mainly attributed to the partial repayment of the funding from the European Central Bank through the TLTRO program by €200 million.
Net loan balances after provisions decreased from €1,137 million as of December 31, 2021 to €1,091 million as of December 31, 2022 reflecting the resolutions in the non-performing portfolio.
Total new lending granted for the period reached approximately €165 million.
Customer deposits declined to €2.11 billion compared to €2.19 billion a year earlier.
Underpinned by common equity of €203.7 million 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 the resolution of non-performing loans.
In 2022, AstroBank had 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 €1,4 billion.
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 €33.4 million, with cumulative sales over the last two years amounted to €62.4 million. It is noted that AstroBank resolves NPEs without portfolio sales.
Other Developments During the Year
AstroBank acquired on October 7, 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.
Also, in December 2022 AstroBank issued €5.2 million and US$9.8 million 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
“AstroBank remains committed to quality and efficient delivery of its services to its corporate and retail clients fully utilising the functionalities allowed by Digital Transformation,” the bank said.
In the fourth quarter of 2023, the company will introduce new products such as a new mobile app and internet-based digital channel, combined with the full digitisation of the bank’s card offering.