Eurobank S.A. · ATHEX:EUROB

Eurobank — Investor Presentation (April 2005)

59 slides from Eurobank's investor presentation, Apr 21, 2005

  1. Slide 1: Transition to IFRS

    Transition to IFRS April 21, 2005

  2. Slide 2: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 2

  3. Slide 3: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 3

  4. Slide 4: 1. Foreword

    1. Foreword The purpose of this presentation is to convey information regarding the overall effect of the transition to IFRS in Eurobank’s financial statements by: ‰ Highlighting main current IFRS policies in comparison to Eurobank’s Greek GAAP ‰ Providing key financial impacts arising from the tran

  5. Slide 5: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 5

  6. Slide 6: Main standards that affect Eurobank's transition from Greek GAAP to IFRS

    2. IFRS Impact 2.1. Main standards that affect Eurobank’s transition from Greek GAAP to IFRS STANDARDS EFFECTIVE FROM 2004 Portfolios’ IAS 39 IFRS 3, IAS 27,36 Goodwill Classification Derivatives Fixed Assets & IAS 39 IAS 16,17, 36, 38, 40 & Hedge Accounting Finance Leases Effective IAS 39, IAS 18 I

  7. Slide 7: Early adoption of IAS 39

    2. IFRS Impact 2.2 Early adoption of IAS 39 On 01.01.04 Eurobank adopted IAS 39 in order to: 9 Ensure comparability of financial information for the transition period 9 Deal with the standard that covers major business aspects of Eurobank 9 Acknowledge that the standard ƒ forms an integral part of I

  8. Slide 8: Total IFRS impact in Eurobank Financials

    2. IFRS Impact 2.3. Total IFRS impact in Eurobank Financials in € million GREEK GREEKGAAP GAAP IFRS IFRS % % 31.12.04 1,940 +162 2,102 + 8.4% Shareholders’ Equity 2004 +5 + 0.3% 1,484 1,489 Operating Income 2004 Net Profit 368 - 28 340 - 7.6% Total Assets 31,939 +1,107 33,046 + 3.5% 8

  9. Slide 9: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 9

  10. Slide 10: Income Statement types of differences between IFRS and Greek GAAP

    3. IFRS Impact by Standard 3.1 Income Statement types of differences between IFRS and Greek GAAP Recurring Occur continuously due to difference in accounting policy Timing Due to income / expenses recognition in different periods One-off Occur only on transition or not in the ordinary course of busi

  11. Slide 11: IAS: Portfolios' Classification

    3. IFRS Impact by Standard 3.2. IAS 39 : Portfolios’ Classification ‰ GREEK GAAP POLICY: 9 Fair Value Through P&L portfolio Fair value changes in I.S. (IFRS) (includes Trading portfolio) 9 Investment portfolio Lower of total cost/amortised cost or market value (Available for Sale - AFS) 9 Impairment

  12. Slide 12: IAS: Portfolios' Classification (continued)

    3. IFRS Impact by Standard 3.2. IAS 39 : Portfolios’ Classification (continued….) ‰ Implications for Eurobank: 9 Fair Value Through P&L portfolio ⇒ No change 9 Investment portfolio ⇒ Classified as AFS, with mark-to-market affecting shareholders’ equity 9 No effect in Income Statement from impairment

  13. Slide 13: IAS: Derivatives and Hedge Accounting

    3. IFRS Impact by Standard 3.3. IAS 39 : Derivatives and Hedge Accounting ‰ GREEK GAAP POLICY 9 Trading derivatives Fair value changes in I.S. (IFRS) 9 Hedging derivatives Accrual Accounting 9 Forward Securities transactions Off-balance sheet items until settlement ‰ IFRS POLICY 9 All derivatives ca

  14. Slide 14: IAS: Derivatives and Hedge Accounting (continued)

    3. IFRS Impact by Standard 3.3. IAS 39 : Derivatives and Hedge Accounting (continued….) ‰ Implications for Eurobank 9 No change for derivatives already classified as trading under Greek GAAP 9 Re-designation of hedging relationships 9 Derivatives not qualifying for IFRS hedge accounting recorded in

  15. Slide 15: IAS 39, IAS 18: Effective Interest Rate

    3. IFRS Impact by Standard 3.4. IAS 39, IAS 18: Effective Interest Rate ‰ GREEK GAAP POLICY 9 Fees received and costs incurred for financial assets recognised on a cash basis as commissions 9 Costs incurred on issuing debt instruments recognised over the maturity date (IFRS) ‰ IFRS POLICY 9 Fees rec

  16. Slide 16: Effective Interest Rate (continued)

    3. IFRS Impact by Standard 3.4. IAS 39, IAS 18: Effective Interest Rate (continued….) ‰ Implications for Eurobank 9 Net fees previously recognised in Income Statement are deducted from equity on transition and gradually recognised in future periods 9 Reclassification from commissions to interest inc

  17. Slide 17: IAS: Loan Impairment

    3. IFRS Impact by Standard 3.5. IAS 39 : Loan Impairment ‰ GREEK GAAP POLICY 9 Specific provisions on individual and portfolio basis raised against performing and non-performing loans 9 Raised provisions are based on expected losses and incorporate the estimated value of collaterals 9 No discounting

  18. Slide 18: Loan Impairment (continued)

    3. IFRS Impact by Standard 3.5. IAS 39 : Loan Impairment (continued ….) ‰ Implications for Eurobank 9 Adjust the Group’s provisioning policy in accordance with the standard’s specifications ƒ No impact 9 Application of discounting on expected cash flows ƒ 5.8% increase of impairment stock ƒ 3.8% inc

  19. Slide 19: Recognition / Derecognition, Securitisation

    3. IFRS Impact by Standard 3.6. IAS 39, SIC 12: Recognition / Derecognition, Securitisation ‰ GREEK GAAP POLICY 9 Securitised assets removed from Balance Sheet – no consolidation of securitisation vehicles 9 Net income of securitisation vehicles recognised in Income Statement due to retained interes

  20. Slide 20: Recognition / Derecognition, Securitisation (continued)

    3. IFRS Impact by Standard 3.6. IAS 39, SIC 12: Recognition / Derecognition, Securitisation (continued ….) ‰ Implications for Eurobank 9 Balance Sheet gross up + € 861 m (Total Assets + 2.7%) ƒ Recognition of securitisation vehicles’ assets + € 699 m ƒ Settlement balances + € 153 m 9 No PAT effect f

  21. Slide 21: IFRS 3, IAS 27: Goodwill

    3. IFRS Impact by Standard 3.7. IFRS 3, IAS 27, 36 : Goodwill ‰ GREEK GAAP POLICY 9 All mergers accounted for with the “pooling of interest” method using the tax reference date as acquisition date 9 Net assets on date of acquisition in accordance with Greek GAAP 9 Acquisition goodwill not recognised

  22. Slide 22: Goodwill (continued)

    3. IFRS Impact by Standard 3.7. IFRS 3, IAS 27, 36 : Goodwill (continued …) ‰ Implications for Eurobank 9 No restatement of business combinations prior to 2004 (IFRS 1) 9 Recognition of goodwill asset and impairment arising from 2004 business combinations ƒ Positive effect in Shareholders’ equity ƒ

  23. Slide 23: Fixed Assets and Finance Leases

    3. IFRS Impact by Standard 3.8. IAS 16, 17, 36, 38, 40 : Fixed Assets and Finance Leases ‰ GREEK GAAP POLICY 9 Fixed assets carried at cost less accumulated depreciation 9 Depreciation using tax rates rather than useful economic life 9 Legal requirement for periodic revaluation of properties (every

  24. Slide 24: Fixed Assets and Finance Leases (continued)

    3. IFRS Impact by Standard 3.8. IAS 16, 17, 36, 38, 40 : Fixed Assets and Finance Leases (continued …) ‰ Implications for Eurobank 9 Revalue all own-use and one investment properties and retain these values as deemed cost affecting shareholders’ equity (IFRS1) 9 Write-off Greek GAAP capitalised expe

  25. Slide 25: IAS: Dividends

    3. IFRS Impact by Standard 3.9. IAS 10 : Dividends ‰ GREEK GAAP POLICY 9 Dividends recognised when proposed ‰ IFRS POLICY 9 Dividends recognised when approved by AGM ‰ Implications for Eurobank 9 Adjust shareholders’ equity with proposed 2003, 2004 dividends ‰ Financial Impact (Net of tax) 01.01.04

  26. Slide 26: IAS: Employee benefits

    3. IFRS Impact by Standard 3.10. IAS 19 : Employee benefits ‰ GREEK GAAP POLICY 9 Post-employment benefits are only defined contribution plans 9 Provisions for employee benefits are in accordance with Greek Labor legislation, solely for staff retirement indemnity 9 Eurobank adjusts provisions based

  27. Slide 27: Employee benefits (continued)

    3. IFRS Impact by Standard 3.10. IAS 19 : Employee benefits (continued …) ‰ Implications for Eurobank 9 No effect from actuarial valuation basis for legal requirement obligation 9 Additional provision for possible separations affecting ƒ Shareholders’ equity on transition ƒ 2004 Income Statement 9 A

  28. Slide 28: Other Standards

    3. IFRS Impact by Standard 3.11. Other Standards ‰ IAS 12, Tax & Deferred Tax 9 Deferred Tax already recognised in Greek GAAP Financial Statements based on Greek GAAP temporary differences (IFRS) 9 Deferred Tax to be recognised in IFRS Financial Statements based on IFRS temporary differences N.B.: A

  29. Slide 29: Other Standards (continued)

    3. IFRS Impact by Standard 3.11. Other Standards (continued…) ‰ Financial Impact (Net of tax) 01.01.04 31.12.04 2004 Shareholders’ Equity Shareholders’ Equity Income Statement Op. Expenses: + € 0.2 m Other Income: - € 0.5 m - € 12 m -€2m PAT: - € 2.9 m Reg. Capital one - off -€2m 29

  30. Slide 30: Standards effective from 2005: IFRS 2

    3. IFRS Impact by Standard 3.12. Standards effective from 2005 : IFRS 2, IFRS 4 Share-based payments IFRS 2 ‰ GREEK GAAP POLICY 9 Existing bonus schemes: share issues with no vesting conditions and stock-option plans with 3 years vesting period 9 No Income Statement charge on Greek GAAP ‰ IFRS POLIC

  31. Slide 31: Insurance contracts IFRS 4

    3. IFRS Impact by Standard 3.12. Standards effective from 2005 : IFRS 2, IFRS 4 (continued ….) Insurance contracts IFRS 4 (phase 1) ‰ GREEK GAAP POLICY 9 No distinction between insurance and investment products 9 Set-up of insurance reserves based on Greek regulations 9 Unit linked products treatmen

  32. Slide 32: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 32

  33. Slide 33: Impact on Total Assets

    4. Impact on the Balance Sheet and Shareholders’ Equity 4.1. Total Assets (in € million) +153 +126 -80 +4 -78 -115 +398 Total impact: +699 EUR +1,107 IFRS Adjustments Reclassifications 31,939 33,046 Securit- Portfolios Settlement Fixed Effective Other Bank Other ization & Balances Assets Interest Dr

  34. Slide 34: Impact on Loans

    4. Impact on the Balance Sheet and Shareholders’ Equity 4.2. Loans (in € million) +11 -51 -30 -29 +140 Total impact: +692 EUR +733 Securiti- Settlement Loan Effective Accrued Other 20,498 sation Balances Impairment Interest Interest Receivables 21,231 Rate (reclass) (reclass) GREEK TOTAL IMPACT: + 7

  35. Slide 35: Impact on Deposits

    4. Impact on the Balance Sheet and Shareholders’ Equity 4.3. Deposits (in € million) Total +51 -6 impact: -1 -78 +32 18,209 18,208 IFRS Adjustments Reclassifications Settlement Other Bank Accrued Balances Drafts Interest GREEK GAAP TOTAL IMPACT: -1 IFRS 35

  36. Slide 36: Eurobank Shareholders' equity as at 31.12.2004

    4. Impact on the Balance Sheet and Shareholders’ Equity 4.4. Eurobank Shareholders’ equity as at 31.12.2004 (in € million) +45 -50 -14 -2 +51 Total impact: +132 EUR +162 1,940 IAS IFRS IAS IAS IAS Other 2,102 10 3 16, 17, 36, 19 39 38, 40 Dividends Goodwill Fixed Employee Financial Assets & Benefits

  37. Slide 37: Total impact on Eurobank Shareholders' equity

    4. Impact on the Balance Sheet and Shareholders’ Equity 4.5. Total impact on Eurobank Shareholders’ equity 01.01.04 31.12.04 Reg. Capital RAR GREEK GAAP € 1,793.0 1,793 m € 1,793.0 1,940 m € 2,344 m 10.57% IAS 39 - 11 - 14 - 78 to - 121 IFRS 3 + 51 IAS 16, 17, 36, 38, 40 + 36 + 45 + 46 IAS 10 + 185

  38. Slide 38: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 38

  39. Slide 39: Total impact on Eurobank's 2004 Net Profit

    5. Impact on the Income Statement 5.1. Total impact on Eurobank’s 2004 Net Profit (in € million) Total Impact: -28 -3 Recurring -9 Timing 368 -22 -3 -3 -2 -16 One-Off -10 +12 340 IAS IAS IAS IFRS Other M.I. 19 39 16, 17, 36, 3 38, 40 Employee Financial Fixed Goodwill Minority Benefits Instruments As

  40. Slide 40: Impact on Eurobank's 2004 Income Statement

    5. Impact on the Income Statement 5.2 Impact on Eurobank’s 2004 Income Statement GREEK GAAP DIFFERENCE IFRS Net Interest Income 1,037.5 56.2 1,093.7 Net Banking Fee & Commission 362.4 (73.7) 288.7 Income Net Insurance Income 0.0 17.9 17.9 Non Banking Services 0.0 26.9 26.9 CORE INCOME 1,399.9 27.3 1

  41. Slide 41: Income Statement – Analysis of differences

    5. Impact on the Income Statement 5.3. Income Statement – Analysis of differences 01.01.04 PRESENTATION 31.12.04 IFRS Reg.TOTAL Capital RECLASSES ADJUSTMENTS DIFFERENCE Net interest income 56.2 56.2 Net banking fee & (37.7) (36.0) (73.7) commission income Net insurance income 17.9 0.0 17.9 Non banki

  42. Slide 42: Quarterly Results

    5. Impact on the Income Statement 5.4. Quarterly Results 122 125 390 363 351 92 94 + 7% 323 + 3% + 9% 1Q 04 2Q 04 3Q 04 4Q 04 Core Profit 91 390 351 363 88 323 81 80 1Q 04 2Q 04 3Q 04 4Q 04 1Q 04 2Q 04 3Q 04 4Q 04 Core Income Net Profit 42

  43. Slide 43: Interest Income Composition

    5. Impact on the Income Statement 5.5. Interest Income Composition NII Quarterly Evolution 302 283 TOTAL 259 273 263 + 7% 246 + 8% + 7% 222 Loan Margin 200 193 206 187 180 MM Mismatch 17 12 12 9 9 12 Earnings on 21 22 19 21 25 24 Capital & Bonds Deposit Margin 39 39 38 40 40 39 AVG AVG 1Q 04 2Q 04 3

  44. Slide 44: Loans and Deposits Spreads

    5. Impact on the Income Statement 5.6. Loans and Deposits Spreads GREEK IFRS IFRS FY 04 1Q 04 2Q 04 3Q 04 4Q 04 FY 04 Total Deposits 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% & Repos Loans Wholesale 1.93% 2.06% 2.05% 2.03% 2.08% 2.06% Mortgage 2.24% 2.27% 2.34% 2.29% 2.29% 2.30% Consumer 8.75% 9.35% 9.16%

  45. Slide 45: Fees Composition and Quarterly Evolution

    5. Impact on the Income Statement 5.7. Fees etc. Composition and Quarterly Evolution 88 88 77 80 TOTAL 91 83 77 75 80 72 69 BANKING FEES 67 Lending 30 24 26 22 20 20 BANKING FEES Activities Network Activities 18 18 20 20 16 & Other Services 14 Capital Markets 11 11 15 10 13 6 Mutual Funds 25 21 21 1

  46. Slide 46: Expenses Composition and Quarterly Evolution

    5. Impact on the Income Statement 5.8. Expenses Composition and Quarterly Evolution Total Expenses TOTAL 182 193 186 193 189 203 SE EUROPE 27 28 24 27 28 32 GREECE 155 165 162 166 161 171 Admin. 51 55 54 60 48 56 Staff 93 91 89 96 96 82 Depreciation 22 17 17 17 17 19 AVG AVG 1Q 04 2Q 04 3Q 04 4Q 04

  47. Slide 47: Segmental Results

    5. Impact on the Income Statement 5.9. Segmental Results 24% Earnings before tax after M.I. in € million 43% 215 8% 1% 22% 2% 122 112 39 6 -11 1 2 3 4 5 6 Retail Corporate AM, PB & INS Capital markets Other SE Europe & Treasury Income 820 250 76 162 38 146 C/I 53.6% 33.7% 47.6% 30.7% n/a 83.8% ROE 3

  48. Slide 48: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 48

  49. Slide 49: Summary and financial targets

    6. Summary and financial targets • Smooth transition to the new standards • No effect on the Group’s business strategy and risk management • Little or no impact from most standards, including IAS 39 • Positive impact on Shareholders’ Equity • Immaterial impact on Income Statement • Negligible impact

  50. Slide 50: Financial Ratios and Targets for 2005

    6. Summary and financial targets Financial Ratios and Targets for 2005 IFRS RESULTS TARGETS RATIOS 1,793.0 31.12.2004 2005-2006 Growth to Revenue Growth >20% exceed 15% p.a. ROE 16.76% Exceed 20% by 2006 Growth to EPS € 1.1 exceed 23% p .a. Growth to DPS € 0.72 exceed 15% p .a. Cost / Income 52.1% B

  51. Slide 51: Table of Contents

    Table of Contents 1. Foreword 2. IFRS Impact 3. IFRS Impact by Standard 4. Impact on the Balance Sheet and Shareholders’ Equity 5. Impact on the Income Statement 6. Summary and financial targets 7. Supplements 51

  52. Slide 52: Contents: Supplements

    Contents 7. Supplements 7.1. IFRS Balance Sheet 7.2. Balance Sheet Reconciliation 7.3. IFRS Income Statement 7.4. IFRS Quarterly results 7.5. IFRS Segmental results 7.6. Transition Timetable 52

  53. Slide 53: IFRS Balance Sheet

    7. Supplements 7.1. IFRS Balance Sheet 31/12/2004 € million ASSETS 01.01.04 31.12.04 Reg. Capital Cash and balances with central banks 1,510 Treasury bills and other eligible bills 514 Due from other banks 733 Trading securities 1,974 Derivative financial instruments 255 Loans and advances to custom

  54. Slide 54: Balance Sheet Reconciliation

    7. Supplement 7.2. Balance Sheet Reconciliation Published GR 2004 IFRS Reclassifications IFRS (in € million) (in € million) GAAP Balance Transition IFRS Adjustments Explanations (*) Balance Sheet Sheet Adjustments ASSETS Cash & Balances with Central Banks 1.552 (42) 1.510 Due from Other Banks 614 (3

  55. Slide 55: IFRS Income Statement

    7. Supplements 7.3. IFRS Income Statement 2004 01.01.04 31.12.04 € million Reg. Capital Interest and discount income 2,087.8 Interest expense (994.1) Net interest income 1,093.7 Banking fee and commission income 414.5 Banking fee and commission expense (125.8) Net banking fee and commission income 2

  56. Slide 56: IFRS Quarterly Results

    7. Supplements 7.4. IFRS Quarterly Results 1st Q ' 04 2nd Q ' 04 3d Q ' 04 4th Q ' 04 G reece SEE 01.01.04 T otal G reece SEE 31.12.04 T otal G reece SEE Reg. T otal Capital G reece SEE T otal N et interest incom e 226.1 19.9 246.0 240.7 22.4 263.1 258.3 24.4 282.7 275.2 26.8 302.0 N et banking fee

  57. Slide 57: IFRS Segmental results

    7. Supplements 7.5. IFRS Segmental results Treasury Capital in € million Retail Corporate AM, PB Elimina- Capital & Other SEE Total Banking Banking & INS tions Markets Net interest income 732 180 15 79 (4) 92 1,094 Net fee and commission income 44 34 76 86 1 47 288 Net Insurance income 18 18 Non ban

  58. Slide 58: Transition Time Table

    7. Supplements 7.6. Transition Time Table 2004 Greek GAAP Results Restated IFRS 2004 – Including Full IFRS 2005 IAS 32 & 39* Transition 2004 Q1 Q2 Q3 Q4 25.02.05 21.04.05 19.05.05 11.08.05 10.11.05 2004 2005 Q1 2005 H1 2005 Q3 IFRS Greek GAAP IFRS interim IFRS interim IFRS interim update results res

  59. Slide 59: Contacts

    Contacts EFG Eurobank Ergasias, 8 Othonos Str., 10557 Athens, Greece Fax: +30 210 3337 337 E-mail: investor_relations@eurobank.gr Internet: www.eurobank.gr Reuters: EFGr.AT Bloomberg: EUROB GA Investor Relations Dimitris Nikolos Tel: +30 210 33371162 E-mail: dnikolos@eurobank.gr Marlen Miliadi Tel:

Eurobank — Investor Presentation (April 2005) on 6ix