National Bank 2004 profit up 7.2 pct despite voluntary retirement costs

National Bank of Greece (NBG), Greece’s largest lender, delivered 7.2 percent earnings growth last year, despite a 109-million-euro employee voluntary retirement charge, in what it said was a bumper year in retail banking. Full-year 2004 group net profit came in at 386.4 million euros ($511 million), versus an average forecast of a 4.6 percent rise to 376.9 million euros, based on a Reuters poll of analysts. National, which reported financial results under Greek accounting standards, said group profit before tax and one-off costs related to its early retirement program grew 27.1 percent to 662.4 million euros. «The full-year results reflect the effort that has been made to leverage further the far-reaching potential of the NBG group,» said Chief Executive Takis Arapoglou, adding that core profit rose 37.6 percent. «Our ongoing expansion into the Balkans made a notable contribution to full-year results, with the region set to become a major contributor to future profitability.» The bank is present in Bulgaria, Romania, Serbia, Albania and the Former Yugoslav Republic of Macedonia (FYROM). The group’s international units contributed pretax profit of 119 million euros, up 5.6 percent, «despite the unfavorable impact of the depreciation of the US dollar.» National plans a 0.60 euro dividend per share for 2004, up 20 percent on the previous year. The yield corresponds to 2.1 percent based on yesterday’s close. The group’s net interest income rose 15 percent to 1.42 billion euros last year, with the net interest margin improving to 3.04 from 2.75 percent in 2003. Retail lending, which grew 29 percent to 14.5 billion euros, led to a change in the composition of National’s assets – now making up 53 percent of its total loan book, versus 48 percent in 2003. The bank reported «brisk growth in mortgages,» where loans rose 45 percent, as was the case in consumer credit – up 37 percent year-on-year. Looking at efficiency, National’s cost-to-income ratio improved to 59.6 from 64.6 percent as the voluntary retirement program «proved to be a success,» leading to the retirement of about 10 percent of its staff, or 1,511 employees. The cost of the program was fully charged to last year’s results, meaning the positive impact on the cost side will be reflected in the years ahead. National, which will unveil its three-year business plan next week, said Tier-1 capital adequacy at the end of 2004 was 11.8 percent. Corporate governance NBG is proceeding with significant changes to its organizational structure, responding to corporate governance requirements. The governing board of the bank approved on Wednesday a program for improving its corporate governance framework, which is based on a study by Nestor Advisors Ltd, an independent consultancy, and its timetable stretches to 18 months. «The profile of the bank has been radically changed regarding its ownership status. NBG today is a bank with a broad shareholder basis and more than 30 percent of its shares is in the hands of foreign institutionals,» said Arapoglou, adding that «the current corporate governance requirements on the domestic and international level dictate the upgrading of the role and functions of its governing board, to fully respond to the best practice standards of the market,» he added. The program’s main points include an increase in the number of independent governing board members, the board’s upgrade in forming a long-term strategy, and the creation of a corporate governance committee for the board, aimed at working as a candidacy selection committee for new board members in the next 12 months. (Reuters, Kathimerini)

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