Total operating income increased by 34% to €97.2 million compared to €72.7 million in 2022
AstroBank recorded profits after taxes of €30.4m in 2023, representing a return of 13.9% on average Equity, compared to €12.2m and yield 6.2% in 2022, growing its earnings by 150%, mainly due to increased interest income.
According to the Bank's announcement, the group's profits, after taxes and excluding non-recurring items, are €9 million for the year 2023, (€7 million for the voluntary retirement plan and €1.9 million in depreciation costs arising from the acquisition of the MEX management company in 2022) amounted to €39.4m, compared to €21.7m in 2022.
Increased interest income
Total operating income increased by 34% to €97.2m compared to €72.7m in 2022. As the Bank reports, the increase is mainly due to net interest income, which increased by 46% in 2023 and amounted to €74.8 million. reflecting the impact of the favorable interest rate environment on the bank's strong liquidity. Net interest margin for the year 2023 was 3%, compared to 1.9% in 2022, supported by the rising interest rate environment.
Net fee and commission income and other non-interest income , amounted to €22.5 million compared to €21.5 million in 2022.
Slight increase in expenses
On the other hand, total expenses amounted to €50.9 million in 2023, marking an increase of 2.8% compared to €49.5 million in 2022.
Personnel expenses represent 53.2% of total expenses, which amounted to €27.1m in 2023, up 4.8% from €25.9m in 2022, reflecting annual increases provided for in the collective agreement of bank employees and ATA and are partially offset by the savings of the voluntary redundancy plan. In 2023, the group proceeded with a voluntary retirement plan, whereby 55 full-time employees were approved to leave, at a total cost of €7 million. It is noted that in 2022, 16 employees left at a total cost of €1.9 million. The total number of permanent of personnel on December 31, 2023 amounted to 392, compared to 443 in 2022.
Other operating expenses in 2023 were up by 1.8% to €16.2 million compared to €15.9 million. in 2022. Depreciation and write-offs decreased to €3.3 million against €3.7 million in 2022 while the special fee, contributions to the Single Resolution Fund, and other charges amounted to €4.3 million, from € 4.1 million in 2022.
The cost-to-income ratio fell to 52.3% in 2023 from 68.2% in 2022, mainly due to increased operating income and management's “continued focus on efficiency and cost management,” according to the Bank.
Revenues before provisions mainly derived from core banking activities show improvement in 2023 to €46.4m compared to €23.1m in 2022, an increase of 100.9% mainly attributed to the rise of net interest income.
Total impairment charges for 2023 amounted to €6.7m compared to €3.7m in 2022. The increase in 2023 is mainly attributable to higher loan impairment charges.
Balance Sheet and capital position
The group's total assets amounted to €2,725 million on December 31, 2023 (December 31, 2022: €2,726 million), remaining stable compared to the previous year.
Loans
Loans after provisions decreased from €1,091m at 31 December 2022 to €933m at 31 December 2023, reflecting significant consolidation in the MEX portfolio. The total of new lending during this period amounted to approximately €90 million.
“Continuous new lending to businesses and individuals in Cyprus confirms AstroBank's strong commitment to the Cypriot economy and its strong financial position which facilitates new business activity”, the Bank says in its announcement.
Deposits
Customer deposits showed an increase of 2% and amounted to €2,155 million compared to €2,112 million the previous year and consist of deposits in euros and foreign currencies, mainly US dollars and British sterling.
On December 31, 2023, financing from Central Banks amounted to €200 million (2022: €300 million) and consists exclusively of financing through the program Targeted Longer-Term Refinancing Operations (TLTRO) III. The Bank proceeded to repay €100 million of TLTRO III financing in September 2023 and €100 million in March 2024.
Capital adequacy at 23.7%
Backed by common equity amounting to €234.1m, the Bank's capital adequacy ratio rose to 23.7% from 18% the previous year, due to internal capital generation through profitability and significant restructuring of non-performing loans. The Core Tier 1 ratio, which consists entirely of common equity, stood at 22.1% as of December 31, 2023.
AstroBank's liquidity ratio remained strong throughout the year, with a coverage ratio of 366% at the end of 2023 and a stable loan-to-deposit ratio of 43%.
MEX
The MEX ratio decreased to 14.9% at 31 December 2023, from 19.8% at 31 December 2022, solely through organic resolution, while provision coverage stands at 44%, from 46.1% in 2022 .
Sales of assets (REOs), direct and indirect, amounted to €43m for 2023, of which €33.7m represent direct sales. The total sales during the last three years amount to approximately €150 million.
During 2023, the capital adequacy ratios were significantly improved by the annual profits but also the reduction in the weighted assets (RWAs), mainly due to the reduction in NPLs and loan repayments. CET 1 and Total Capital ratios stood at 22.1% and 23.7% respectively as at 31 December 2023, compared to 16.5% and 18% in 2022. The Bank's capital adequacy ratios are well in excess of minimum supervisory requirements .
As of December 31, 2023, the MREL ratio stood at 27.8% and meets the final binding target set by the supervisors of 26% effective December 31, 2024, which also includes the increase of the countercyclical buffer by 0.5% in June 2024.
ESG and digital transformation
According to the group's announcement, the Bank is committed to operating in an economically and socially sustainable manner. In this direction, it has drawn up and intends to implement an upgraded ESG program with significant improvements in the Governance Pillar, while giving more weight to the Environment Pillar, in combination with AstroBank's already strong commitment to the Social Pillar.
With the main objectives of increasing energy efficiency and supporting customers in the green transition, AstroBank reports that it has a wide range of environmentally friendly loan products, which in combination with the implementation of a plan to reduce scope 1, 2, and 3 emissions (including financed emissions) and the full integration of the environmental agenda into the bank's business model, form the core of the environmental pillar.
He also mentions that, with the aim of remaining competitive and providing quality and efficient services to its customers, Astrobank continues to invest in technology and automation.
In November 2023, the Bank launched a new website and mobile banking application, thereby providing an enhanced banking experience to its customers. Around the middle of 2024, the full digitization of the bank's cards is also expected.
“These moves are combined with a series of digitization and internal process integration actions that will make customer service even more efficient,” he says, adding that with integrated new digital channels and a strong network in 14 locations across Cyprus, AstroBank aspires to play a pivotal role in banking sector of Cyprus.
The CEO of AstroBank, Aristides Vourakis, in his statement states that 2023 “was an exceptional year for AstroBank. The systematic efforts of recent years, towards a focused business model, rationalization of operation, restructuring and reduction of balance sheet risks, in combined with the favorable interest rate and macroeconomic environment, contributed to the achievement of strong financial results”. capable of adding value to its customers and shareholders”.
Mr. Vourakis states that at AstroBank “we remain committed to our business plan, which in recent years has led to substantial operational efficiency, quality customer service and improve profitability”.
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