Balance sheet and profit and loss account for the financial year 2005
22/03/2006 - Press Releases
At its meeting on 22 March 2006, the General Council of the Bank of Greece approved the Bank's annual accounts for the financial year 2005.
Net profits in 2005 came to €228.5 million, compared with €205.6 million in 2004, i.e. they increased by 11.14%.
The major determinant of the above result were the gains from financial operations in foreign currency and securities (€155.4 million in 2005, compared with €99.5 million in 2004), along with the considerably reduced losses from the valuation of securities and foreign reserves at year-end (€21.7 million in 2005, compared with €71.2 million in 2004).
The rise, during 2005, in the exchange rates of the major foreign currencies (in particular of the USD) against the euro led, through the valuation, at end-2005, of the Bank's assets which are denominated in foreign currency, to unrealised gains of €46.2 million, against unrealised losses in 2004, which, as already mentioned, had affected the financial results of that year. Unrealised gains from the valuation of the Bank's gold reserves were even more substantial, amounting to €636.3 million.
It should be noted that, according to the accounting rules and principles determined by the European Central Bank (ECB) for the members of the European System of Central Banks, in particular the principle of prudence, unrealised gains from the valuation of gold, financial instruments in foreign currency and securities are not recognised as income in the profit and loss account but are directly transferred to revaluation accounts (which operate as reserves for the specific financial assets). By contrast, unrealised losses arising at the end of the financial year are treated as expenses and are transferred to the profit and loss account.
The Bank's total net income was slightly higher than in the previous financial year (2005: €610.8 million, 2004: €598.6 million). In 2005, as in previous financial years, the ECB retained the total of its surplus (including income earned on its share, 8%, of the euro banknotes in circulation). This surplus was set aside in a provision against exchange rate, interest rate and gold price risks.
Evolution of the Bank's expenses in the financial year 2005
· Operating expenses (staff costs, pensions and benefits, administrative expenses, depreciation) increased by €12.5 million or 4% (2005: €323.1 million, 2004: €310.6 million).
· Provisions declined by €23.3 million (2005: €59.2 million, 2004: €82.5 million). The decline is due to the fact that the financial results for 2004 had been negatively affected by additional provisions of €36.1 million to cover the loss of the ECB in that financial year. By contrast, the provision for the Bank's future obligations to the Pension Funds of the Personnel increased, compared with 2004.
The most important developments in balance sheet items in the financial year 2005
· The balance of Revaluation Accounts showed an increase (2005: €682.7 million, 2004: €123.9 million) due to the valuation of gold, assets in foreign currency and securities at the end of the financial year (positive differences that arose from the comparison of average purchase costs with market prices on 30 Dec. 2005).
· The restructuring of the Bank's portfolio continued in the financial year 2005 through the substitution of investments in foreign currency with investments in euro. The bulk of the Bank's portfolio on 31 Dec. 2005 consisted of Greek government bonds and euro-denominated government paper issued by other euro area countries.
· In the financial year 2005, the Bank's capital was increased by €22.2 million. This amount accounts for a part of the surplus value which arose from the revaluation of the Bank's real estate (31 Dec. 2004) at market prices. The increase was covered by the issuance of 3,972,977 new shares of a nominal value of €5,60 each, which were distributed free of charge (bonus shares) to the Bank's shareholders at a rate of one bonus share to three old shares. The Bank's ordinary reserve was increased by an equal amount, drawn from the profits for the financial year 2005, so as to become equal to the capital, in compliance with Articles 10 and 71 of the Bank's Statute.
The total dividend per share that will be proposed to the General Meeting of the Bank's shareholders for distribution comes to €2.40, compared with €2.14 (adjusted to take into account the new number of shares) for the financial year 2004, i.e. it is higher by 12.15%. On the basis of the closing price of the Bank's share on 30 December 2005 (€94.45), the dividend proposed for distribution corresponds to a return of 2.54%, while on the basis of the average price of the Bank's share during 2005 it corresponds to a return of 3.16%.