Balance sheet and profit and loss account for financial year 2007
14/04/2008 - Press Releases
At its meeting on 17 March 2008, the General Council of the
Bank of Greece approved the Bank's audited Annual Accounts for the year ending
31 December 2007.
The Bank's net profits in 2007 amounted to €284.7
million, compared with €244.6 million in 2006, thus increasing by 16.4%.
The total dividend per share that will be proposed to the
General Meeting of the Bank's shareholders for distribution comes to €3.20,
compared with €2.90 for financial year 2006 (+10.3%).
On the basis of the closing price of the Bank's share on
31 December 2007 (€92), the dividend to be proposed for distribution
corresponds to a return of 3.5%.
An amount of €36 million from the profits of 2007 has
been allocated to the extraordinary reserve, which came to €55 million.
Analysis of the profit and loss account for 2007
The Bank's total net income in 2007 was slightly lower
than in the previous financial year (having decreased by 0.6% to €825.5
million, from €830.9 million in 2006).
This result was primarily due to the decrease in profits from
swap transactions, which, as in the previous year, were carried out following an
approval by the ECB in order to increase the special provision for the Bank's
future liabilities to its personnel social security funds. Reduced profits from
swap transactions (€93.4 million in 2007, compared with €204.4 million in
2006) were the main determinant of the decrease in the total net result from
financial transactions (€104 million in 2007, from €241.7 million in 2006).
By contrast, net interest income, being the Bank's primary
source of income, recorded a significant increase of 27%. Net income from
commissions increased by 8.1%, while other income increased by 18.4%.
Net interest income came to €540.9 million, from
€426.0 million in 2006, due to the high returns on the assets included in
the Bank's portfolios.
Net income from commissions came to €131.7
million, from €121.8 million in 2006. This income mainly concerns
commissions received by the Bank from the Greek State for transactions
conducted on the latter's behalf, as well as commissions from the management
of the Common Capital of Legal Persons in Public Law and Social Security
Other income came to €48.9 million, from €41.3
million in 2006. They concern income from the activities of the Banknote
Printing Works (IETA) of the Bank of Greece, income from participating
interests, as well as the amount from the reallocation of the Eurosystem's
monetary income. It should be noted that other income does not include
income arising from the Bank's allotted share in the ECB's income on euro
banknotes in circulation and in the ECB's net profits, since the ECB, in
2007 as in previous financial years, retained the full amount of its surplus,
including income from its share (8%) in the total value of euro banknotes in
circulation issued on its behalf. This surplus was set aside in a provision
against future foreign exchange rate, interest rate and gold price risks.
Total expenses in 2007 were lower than in the previous
financial year (having decreased by 7.7% to €540.8 million, compared with €586.2
million in 2006).
Reduced provisions contributed decisively to this development.
Total provisions made during financial year 2007
came to €148.1 million, compared with €227.6 million in 2006. This
decrease concerns the Bank's provision for future liabilities to its
personnel social security funds, which came to €93.4 million, from €204.4
million in 2006. These sums concern profits from swap transactions conducted
with the ECB's specific approval.
The Bank's operating expenses excluding provisions
(staff costs, pensions, administrative and other expenses, depreciation)
increased by 9.5% to €392.7 million (2006: €358.6 million, with an
increase of 11%).
Operating expenses were substantially affected by:
- the increase in payments for staff retirement. As in the
previous financial year, a significant number of employees retired in 2007
- the increased depreciation of euro banknote printing costs;
- the increase in other expenses, including the Bank's aid to
It should be noted that the increase in expenditure for
wages and other staff payments was contained at 6.7%, despite the extraordinary
expenses for the reorganisation of the Bank. The corresponding increase in 2006
Major developments in the Bank's balance sheet items
during financial year 2007
The Bank's total reserves in international standard gold
amount to 4.6 million ounces (143.2 tonnes), having recorded a slight increase
of 25 thousand ounces compared with the previous financial year. The increase in
the value of gold in euro was more substantial, having come to €2.6 billion on
31 December 2007, from €2.2 billion on 31 December 2006.The increase of €406
million is associated with the rise in the price of gold.
The total amount resulting from the continuous rise in the
price of gold in the past few years comes to €961.3 million. This amount,
which has been transferred and kept in an adjustment account, represents a
buffer reserve for future potential adverse developments in the price of gold.
Euro banknote circulation
In financial year 2007 the Bank's share in total euro
banknotes in circulation increased by €1 billion and came to €16.3 billion
on 31 December 2007, compared with €15.3 billion on 31 December 2006. This
increase is attributed to the rise of €50 billion in the total value of euro
banknotes in circulation, which came to €677 billion on 31 December 2007. This
change had a positive effect on the Bank's results, since it is associated with
the substantial decrease of €2.5 billion (annual average decrease in 2007) in
the Bank's liabilities to the ECB from the TARGET account balance and, therefore,
with the decrease in interest paid by the Bank in 2007 on these liabilities.
In financial year 2007 the bulk of the Bank's managed
portfolios continued to consist of Greek government bonds and euro-denominated
government paper issued by other euro area countries. This choice resulted in
limited exposure to foreign exchange risks and risks of changes in the price of
securities, taking into account the conditions that prevailed in the markets in
2007, especially the continuing appreciation of the euro vis-?-vis the major
Monetary policy conduct
In the context of the single monetary policy conduct in the
euro area countries, the Bank provided the necessary liquidity to the credit
system, the average level of which amounted to €4.7 billion in the course of
Adjustment of the value of real estate
The Bank adjusted the book value of its real estate to its
reasonable (market) value, as determined by independent appraisers. The
resulting surplus value (€71.5 million) was transferred to a special reserve
created by the adjustment of the value of real estate, which amounted to €541.6
Reorganisation of the Bank
The administration of the Bank of Greece, taking into account
the new conditions created within the Eurosystem, made in agreement with the
association of the Bank's employees, organisational adjustments to its units.
The arrangements made in 2007 concerned organisational
changes to Head Office units and a reduction in the network of the Bank's
Branches and Agencies. Similar arrangements will be made in the coming years.
It should be noted that almost all other national central
banks of the Eurosystem have made organisational adjustments and significant
reductions of their branch network.