Piraeus Bank gives priority to its organic growth, according to its business plan. This was the point stressed by the Chairman and Managing Director of Piraeus Bank Group Mr. Michalis Sallas, both during the Annual General Meeting of shareholders, which was successfully held this morning, and at the Press conference given by the Bank management in the afternoon.
Mr. Sallas underlined that in 2006 the growth of Piraeus Group will continue at a satisfactory rate and it is estimated that its assets will approach Euro30 billion. Mr. Sallas mentioned that the Bank management will evaluate any case of acquisition, based on the value creation to shareholders and the growth prospects for the Group. He also stressed that Piraeus Bank has at the moment the necessary available funds to investigate, if necessary, any such case, without the need to increase its share capital.
The Group's net profit is estimated to increase in 2006 at a very satisfactory rate. Mr. Sallas said he estimates that net profit will exceed Euro380 million this year, versus Euro263.8 last year, i.e. they will rise by more than 45%.
In 2006, more emphasis will be laid on the development of retail banking operations (particularly medium and small-sized enterprises), aiming to increase loans by at least 25% in Greece and abroad. The goal for the branch network is to reach 550 branches by the end of 2006, against 450 at the end of 2005, namely to open 100 new branches in Greece and abroad. As a result, approximately 900 new jobs will be created.
In general, in his speech at the General Meeting of shareholders and the Press conference, Mr. Sallas underlined that 2006 will be a very significant year for the growth of Piraeus Bank, and an essential year for the competitiveness and enhancement of the entire Greek banking system, in Greece and abroad.
In replying to the reporters' question about interest rates, he said he does not see any significant changes until the end of the year. He mentioned that there may be a slight rise in interest rates by the European Central Bank, which however will not affect corporate or household borrowing.
In relation to the risk of over-borrowing of Greek households, Mr. Sallas said that everyone should borrow money frugally, with the aim to cover actual needs, and always based on their ability to repay the loans. He stressed that it is wrong for households to receive bank loans in order to buy short-living goods, and for purposes other than investment.
However, he pointed out that household loans now represent 38% of the Greek GDP, while the corresponding average in the euro zone is 56% of the GDP. In addition, corporate loans in Greece are still lower than the average in the euro zone. In particular, this percentage in Greece is 45%, while the average in the euro zone is 61%.
The chairman of Piraeus Bank Group described in detail the performance of the Bank in 2005, which included the following:
- the Group's increased net profit after tax and minority rights by 107%. Profit reached Euro263.8 million against Euro127.3 in 2004;
- the increased net earnings per share by 104%;
- the increased net interest income by 27% and net commissions income by 35%;
- the retaining of net interest margin (NIM) at 3.33% on interest earning assets;
- the improved of "cost to income" ratio at 54.9% (not including new acquisitions, new branches and non-repeated expenses) against 59.6% in the previous year;
- the improved return on equity (ROE) after tax to 21% against 14.9% in 2004, with shareholders' funds increased by 53%.
- the increased loan portfolio by 31% and deposits by 20%.
With reference to the Group's continuous growth, Mr. Sallas said that in 2005 Piraeus Bank acquired three foreign banks, Evrobank in Bulgaria, Atlas in Serbia, and Egyptian Commercial Bank in Egypt, thus enhancing its presence in the wider area.
The General Meeting approved the proposal of the Bank management for the distribution of a dividend of Euro 0.50 per share, which is increased by 25% compared to last year. In addition, the management proposed the distribution to shareholders of one new free share for every 4 olds shares; this will be decided at an iterative General Meeting, as it requires increased quorum.
Finally, the General Meeting elected, like every year, the Bank's Board of Directors, with the addition of two new non-executive members.