Financial Results for the year ended 31 December 2022
AstroBank recorded strong profitability in the year ended December 31, 2022 with net income reaching €12.2 million, while increasing equity to €203.7 million. Profitability represents a 6.2% return on equity, while the ratio capital adequacy amounted to 18%. Net income without the inclusion of non-recurring items amounted to €21.7 million.
In his statement on the occasion of the announcement of the 2022 financial results, the CEO of AstroBank, Mr. Aristidis Vourakis, highlighted that:
“AstroBank's efforts over the past two years towards a focused business model, streamlined operation, and rapid resolution of past outstandings, have yielded very strong financial results in 2022. With over €200 million in capital, a broad Pan-Cypriot presence and improved digital services , AstroBank will play a pivotal role in serving businesses and Individuals”.
Income statement and profitability
AstroBank recorded net income of €12.2 million in 2022 compared to €3.3 million in 2021. Excluding non-recurring expenses of €9.5 million, which included €7.6 million in MEX management company Termination Charges and €1.9 million for voluntary retirement plan (€0.7m in 2021), earnings for 2022 amount to €21.7m vs €3.9m in 2021. Net income represents a 6.2% return on average equity vs 1.7% in 2021.
Total operating income decreased by 2%, from €74.2 million to €72.7 million. The 6.5% increase in net interest income, from €48.1 million to €51.2 million, as and largely flat net fee income of €16.9m, offset by a decrease in other income from €9.1m to €4.6m. The decrease mainly reflects gains from the acquisition of Byblos Branch Limassol in 2021 and the investment valuation adjustments in 2022.
Total operating expenses decreased by 11.8%, from €56.1 million in 2021 to €49.6 million in 2022. The decrease mainly reflects the elimination of management costs as a result of the acquisition of the MEX management company, and is partially offset from the increase in other administrative costs. As a result of overall cost control efforts, staff costs remained stable despite the impact of the annual increase. Depreciation remained on a downward trend.
Revenue before provisions was €23.1m in 2022 vs €18m in 2022. Provisions and valuation adjustments were down to €3.7m vs €13.4m last year, reflecting improvement from the recoveries of the Bank's non-performing loans. In 2022, deferred tax assets of €2.7 million were recognized in relation to losses from previous years.
Balance Sheet and Business Activity
AstroBank's total assets on December 31, 2022 amounted to €2,726 million, showing a decrease from €3,018 million. in 2021, mainly due to the partial repayment of the funding from the European Central Bank through the TLTRO program of €200 million
Net loan balances after provisions decreased from €1,137m at 31 December 2021 to €1,091m at 31 December 2022, reflecting significant recoveries from the non-performing portfolio. The total of new loans during this period amounted to approximately €165 million. The continuous new lending to companies and individuals in Cyprus confirms AstroBank's strong commitment to the Cypriot economy and its strong financial position that facilitates new lending activity.
Customer deposits fell to €2.11 billion compared to €2.19 billion a year earlier, reflecting deposit movements in the current environment of rising interest rates.
Backed by common equity of €203.7 million, the Bank's capital adequacy ratio increased to 17.96% in 2022, from 16.58% the previous year, due to internal capital generation through profitability and a significant reduction in non-performing loans. The Core Tier 1 ratio, consisting entirely of common equity, stood at 16.54% as at 31 December 2022, reflecting the strong capital contributions from AstroBank's shareholders of approximately €115 million since 2017.
The liquidity of AstroBank remained strong throughout the year, with a coverage ratio of 281% at the end of 2022 and a stable loan-to-deposit ratio of 52%. The Bank also maintained immediate liquidity and cash and cash equivalents of €1.4 billion.
The MEX ratio decreased to 19.5% on 31 December 2022 from 25.6% on 31 December 2021, while provision coverage remained stable at 45%. Real estate sales amounted to €33.4 million, with total sales over the last two years amounting to €62.4 million. It is noted that AstroBank resolves MEX through internal processes, without portfolio sales.
< strong>Other developments during the year
On October 7, 2022 AstroBank reacquired the 74.9% it had sold of the former QQuant Master Servicer Cyprus Limited, the entity that managed the MEX and REO sales. The transaction required a total consideration of €13 million, the cost of which is fully reflected in the financial statements and capital position as of December 31, 2022. AstroBank proceeded to integrate the MEX management into the Bank's activities to achieve significant synergies and closer operational coordination with that of the Bank itself.
In December 2022, AstroBank issued €5.2 million and US$9.8 million two-year senior bonds, which are eligible for the Bank's MREL requirements. The bonds are listed on the Cyprus Stock Exchange.
ESG and digital transformation
The Bank is committed to operating in an economically and socially sustainable manner. In this direction, it has drawn up and implemented an upgraded ESG program with significant improvements in the Governance Pillar, while giving great importance to the Environment Pillar, in combination with AstroBank's already strong commitment to the Social Pillar. A wide range of environmentally friendly loan products, combined with the implementation of a plan to reduce scope 1 (direct from its operation) and scope 2 (indirect from energy use) emissions and the full integration of the environmental agenda into the business model of the Bank, are the core of the Environmental Pillar.
AstroBank remains committed to providing quality and efficient services to its corporate and private customers, taking advantage of the potential of digital technology. In the 4th quarter of 2023, a new mobile application, a new online channel will be introduced, while the full digitization of the Bank's cards will proceed. At the same time, a series of actions will be undertaken to digitize internal processes that will make customer service even more efficient. With its integrated new digital platforms and strong network in 15 locations Pan-Cypriot, AstroBank aspires to play a pivotal role in the Cyprus banking sector.
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