Credicom Consumer Finance Bank SA 2016 Annual Report Certification of the Board of Directors and Board of Directors’ Report Financial Statements Notes to the Financial Statements including Financial Risk management disclosures Independent Auditors’ Report Availability of the Financial Statements
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Credicom Consumer
Finance Bank SA 2016 Annual Report
Certification of the Board of Directors and Board of Directors’ Report
Financial Statements
Notes to the Financial Statements including Financial Risk management disclosures
Independent Auditors’ Report
Availability of the Financial Statements
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
1
Certification of the Board of Directors and Board of
Directors’ Report
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
2
Certification of the Board of Directors
Certification by the Chief Executive Officer and the BoD member in accordance with article 4 par. 2
of the Law 3556/2007)
We, the members of the Board of Directors of Credicom Consumer Finance Bank SA, certify that to
the best of our knowledge:
the annual financial statements for the year ended 31 December 2016, which have been
prepared in accordance with the applicable accounting standards, present fairly the assets,
liabilities, equity and annual results of the Bank, and
the annual report of the Board of Directors presents fairly the development, the
performance and the position of the Bank, including the description of the main risks and
uncertainties they face.
London, 5 September 2017
CEO A member of the Board of
Directors
Anastasia Sakellariou Anastasios Karkazis
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
3
Board of Directors’ Report
Global outlook: Medium term risks skewed to the downside
Global economy gained speed from H2-2016 onwards anticipating a continuation of the current
positive momentum. Global economic growth is expected to accelerate to 3.6% compared to 3.1%
in 2016 according to April’s World Economic Outlook of the International Monetary Fund.
Current expectations of a stronger activity and a more robust global demand, along with agreed
restrictions on oil supply, supported the recovery in commodity prices from their troughs in the
first months of 2016. Higher commodity prices provided some relief to commodity exporters and
led to an increase in global headline inflation.
The outlook profile and growth drivers vary among advanced and emerging economies. In the
advanced economies group, the U.S. is projected to gather steam due to the ongoing expansionary
fiscal policy, whereas in Europe, the cyclical recovery from the 2008-09 & 2011-12 crises will help
retain growth modestly above potential over the next few years. Among emerging economies,
especially those that rely heavily on energy or metal exports, the adjustment to lower commodity
prices is a driver of the outlook, in both the short and medium term. The slowdown of productivity
growth remains a medium-term challenge for many emerging markets.
Downside risks stem from several potential factors:
• An inward shift in policies, such as a move towards protectionism, with lower global growth due
to reduced trade and cross-border investment flows.
• A faster-than-expected pace of interest rate hikes in the United States, which in turn could
trigger a more rapid tightening in global financial conditions and a sharp dollar appreciation,
with adverse repercussions for vulnerable economies.
• An abrupt rollback of financial regulation, which could spur excessive risk taking and increase
the likelihood of future financial crises.
Other factors of noneconomic nature include geopolitical tensions, domestic political discord, risks
from weak governance and corruption, extreme weather events, and terrorism and security
concerns.
Greece: Possible green-shoots in economic recovery
The better than expected economic recovery along with the completion of the long-waited second
review of the 3rd Economic Adjustment Programme for Greece have created a positive momentum
for the country in 2017. This has resulted in the release of an EUR 8.5bn tranche in July 2017,
allowing the Greek government to repay upcoming debt maturities amounting to EUR 6.6bn in the
same month, including the ECB (EUR 3.9bn.) and private-sector bondholders (EUR 2.3bn.). It will
also enable the settlement of some of the government's arrears, thereby injecting much-needed
liquidity into the economy.
The risk of a currency denomination has diminished substantially. While the events of 2015
illustrate the volatility of Greek politics, the current political situation is calmer, and opinion polls
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
4
indicate a broad-based shift of support towards parties that are in favor of continued euro area
membership.
After three years of stagnation and a cumulative loss in output of more than 27% since the onset
of the crisis, Greece has started posting positive growth rates. Employment has been rising for
more than a year, thereby supporting private consumption. Investments are expected to be
supported by an acceleration of the EU structural funds that amount to EUR 15.2bn (8.4% of 2017
GDP) for the 2014-2020 period. On top of that, significant funding is available from the European
Investment Bank (EIB, Aaa stable) and the European Bank for Reconstruction and Development
(EBRD, Aaa stable).
In 2016, Greece’s fiscal targets were exceeded, posting a primary surplus of 4.2% of GDP as
opposed to the target of 0.5% of GDP. The budget deficit in the first five months of the current
year (on a modified cash basis for central government only) was EUR 1.24bn., circa 25% lower than
the deficit for the same period in 2016. The targeted fiscal deficit for this year according to the
medium-term fiscal plan stands at EUR 2.03bn. The primary surplus was also higher than last year,
by circa 26%. Revenues were slightly below target while overall spending was 3.8% lower than the
target.
Real GDP in Q1-2017 turned out more positive than first estimated, with growth at 0.4% both on a
quarterly and annual basis, compared to a first estimate of -0.1% QoQ and -0.5% YoY. The leading
indicators also point upwards, with industrial production expanding by more than 7% on average
in January-April compared to the previous year. The economic sentiment indicator has recovered
to 2015 levels, prior to the political turmoil caused by the July 2015 referendum.
For 2017, economic activity is expected to continue to recover even more, with consumer and
investor sentiment as the fundamental growth drivers in the short-term. According to the
European Commission, real GDP is expected to grow by 2.1% YoY in 2017 and 2.5% in 2018, while
private consumption is expected to be the main driver of growth in 2017, supported by the
increase in employment. Furthermore, exports are set to gain momentum in the upcoming years as
Greece’s tourism sector and related sectors are experiencing increased demand.
The main risks related to growth have been the completion of the second review, and that was
successfully concluded in H1-2017, allowing the disbursement of EUR 8.5bn from the ESM. This at
the same time has paved the way for a number of fiscal and structural measures that the
government has to legislate. These measures aim to provide a higher level of comfort than
previously that the fiscal stance will remain appropriately tight in 2017 and 2018, while some of the
other measures implemented could have a positive economic impact over the coming years. Inter
alia, these measures are focusing on the reduction of the particularly elevated stock of non-
performing exposures (NPEs) in the banking sector. Besides adoption of bank-specific NPE-
reduction targets and the legislation to allow the operation of specialized asset management
companies, the government has now also strengthened the process for out-of-court debt
restructuring and provided legal safeguards for those involved in such debt workouts. The process
of NPE reduction is back-loaded focusing on a reduction targeted period of 2019-2020. The
cleaning-up of the banks’ balance sheet is a pre-condition so as to return to bank lending as well
as corporate investment.
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
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All of the above have led to an upgrade of Greece’s sovereign bond rating by Moody’s in June by
one notch to Caa2 from Caa3 with a Positive Outlook. In detail, the three main drivers for this
upgrade were first the successful conclusion of the second review, second the improved fiscal
prospects on the back of 2016 fiscal outperformance and third the tentative signs of the economy
stabilizing. Equally important though is the Positive Outlook, implying a further upgrade of the
country’s sovereign rating should the completion of the third Economic Adjustment Programme
successfully conclude, leading to potential debt relief.
Credicom: The strategy for a ‘Challenger’ Bank
The Bank has traditionally been a specialist in consumer and car finance both directly by offering
consumer finance and car loans and indirectly through a car leasing subsidiary active in the long-
term rental of new or used private cars1. Its current performing loan portfolio consists almost
exclusively of car loans originated prior to 2013, when it ceased to pursue new business. In
essence, since 2013 the Company has operated in a rundown mode which it anticipates to be
completed by 2018.
As at 17/2/2017 and following the approval by the European Competent Authorities (ECB/SSM and
Bank of Greece), the Bank has been fully acquired by Atlas Merchant Capital LLC through its
affiliate AMC Oak Sarl, a Luxembourg entity. The ultimate purchaser is Atlas Merchant Capital Fund
LP (‘AMC’) which is an investment fund specializing in the financial services industry, particularly in
areas of growth and opportunity with a focus on investment management.
Our plan is to use the Company’s full banking license and operational platform to:
(a) provide comprehensive banking services (i.e. lending to corporates and SMEs, ancillary payment
services, accepting deposits, retail banking, etc.) and
(b) to acquire, restructure and refinance existing loans in companies (medium and large SMEs) that
have viable business models, but overleveraged capital structures requiring urgent capital and
funding infusions.
As a first step, we intend to pursue a “thematic approach by sector” for restructuring, new funding
and servicing, out of a fraction of the pool of €110bn NPE loans, which relate to viable operating
companies in Greece. At the same time, the Bank will also engage in more capital intensive
activities in order to develop into a clean Challenger bank, with state of the art IT infrastructure and
‘best in class’ personnel. Going forward, we will develop a multichannel proposition to acquire and
serve its customer base, based on 3 channels:
- Online
- Mobile and
- Branches / RMs (Hub branches and Kiosks).
Eventually and by 2020, the Bank’s business model will have matured and the Bank will have a fair
share of the Greek market.
1 Disposed on the 23rd of March to Atithasos Trading & Shipping S.A.
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
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Furthermore, management will build on the strong existing compliance culture of Credicom and
further align the current Internal Control Environment which is based on permanent and periodic
controls, to a 3 Lines of Defense model, with clear roles and responsibilities and a risk framework
interrelated to the Bank’s risk appetite.
The above strategy and actions are described in detail in the Bank’s Business Plan which has been
approved by the ECB/SSM and BoG on 17/2/2017.
2016 Financial Performance
Credicom’s 2016 Interest Income was significantly lower than that of the previous year, due to
lower loans outstanding. In addition, Interest Expense also moderated as a result of the full
repayment of interbank borrowings from the former shareholder CACF. The lower banking activity
had a similar negative effect on Net Fee and Commission Income that decreased by -78%, resulting
in Net Banking Income of €1.6 million compared to €5.5 million in the previous year.
Net Other Operating Income amounted to €1.8 million from €3.0 million of which €1.0 million
related to the one-off return of withheld tax on bonds interest. Excluding this item, the income
stemming from the collection activity of the written-off loan portfolio remained stable compared
to the previous year at circa €1.6 million. The Company’s total operating income amounted to €3.5
million from €8.5 million in 2015 posting a decline of 59% off the back of the amortising
underlying book.
The Company’s Operating Expenses continued to decline reaching €7.9 million, 17% lower than
2015. This drop was the result of lower (a) collection and legal costs, (b) depreciation costs
attributed to hardware and software equipment, and c) reduced payments to Service Providers. On
the other hand, Personnel expenses stood at €3.6 million vs. €3.1 million in the previous year, due
to the increased provision for the pre-existing Voluntary Exit Plan. Overall, the 2016 Pre-Provisions
Result amounted to €-4.4 million vs. €-1.0 million in the previous year.
During 2016 there was a reversal on provisions for loans and advances, to adjust for the better
macroeconomic environment and the improved recoveries compared to 2015. Moreover, the Bank
impaired its participation in Emporiki Rent by €2.1 million, following the disposal agreement
completed on 23.3.2017.
The recognition of deferred tax assets (€12 million) is based on the assumption that the Bank,
being a going concern, will generate sufficient taxable profits over the course of the next twenty
years to utilize losses relating solely to loan loss impairments and accounting write offs, also taking
advantage of recent favorable legislation. In 2016, Credicom’s after tax result was a profit of €9.6
million compared to a loss of €-2.2 million in 2015.
Regarding the Bank’s financial position as of the end of 2016, total assets amounted to €50.6
million compared to €52.8 million as of the end of 2015. Gross Loans in December 2016 reached
€33.7 million decreasing by €42.9 million compared to 31.12.2015 (€79.6 million) due to customer
repayments and accounting write-offs (€11.7 million). The accumulated loan loss allowances as at
the end of 2016 amounted to €14.6 million compared to €30.4 million in 2015. The coverage of
loans in arrears over 90 days reached 90.2%, whereas the NPL ratio of the portfolio stood at 44.3%.
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
7
Cash and reserves amounted to €17.5 million, compared to just €0.9 million in 2015, even after the
full repayment of the Bank’s interbank liabilities to CACF (amounting to €11.2 million in 2015).
Other assets also declined due to the lower banking activity along with Tangible and Intangible
Assets.
On 31.12.2016, equity reached €45.8 million, and the Bank’s Common Equity Tier 1 ratio stood at
91.7%. Credicom’s active goal is to maintain a capital base at considerably higher levels than the
minimum requirements set by the regulators (Bank of Greece) and the other Greek banks based on
Basel III (CRD IV) rules.
2017 prospects
We believe that 2017 will be a turning point for the Bank and will lead to significant changes in the
Balance Sheet. Following several years in a run-down mode the Bank will overhaul its operating
model entirely, shifting from a run-down, auto-loans financier to a proper Challenger Bank. To this
end, the Bank and its advisors have developed a detailed plan that describes all steps and
investments required to transform Credicom into a full-service bank. The plan encompasses:
- offering credit advisory services to Greek corporations and NPL servicing and/or acquisition;
- transforming into a challenger bank within 12 months, focusing on medium and large SME /
corporate lending, and funding through retail deposits via a 'light' branch network and state-of-
the-art online / mobile value proposition;
- assessing expansion into additional retail and SME / corporate products in 3 – 4 years time
depending on customer demand.
The targeted organizational structure and operational model has been designed, in parallel with
the IT architecture and required IT investments for the core banking system and the peripheral
applications. The recruitment plan has been clearly formulated and will commence in the next 12
months.
In order to fund the envisaged plan, the BoD has decided to initiate a sizeable capital raising
process through a private placement that will be launched in the second half of 2017. Actual timing
and size of this effort is subject to market conditions.
Financial Risk management
Credicom is a fully standalone Bank with all key risk management functions performed internally.
The risk management function designs and implements a system of transversal supervision and
prevention mechanism, which was built upon the French regulatory system.
The Bank’s new management is currently building on the existing infrastructure in order to develop
a ‘3 lines of defense’ model, with an aim to align the risk management function to the new
business model. The main pillars of financial risk management are described below. The notes to
the financial statements also include the tables with current and prior year balances.
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
8
Credit risk
Credit risk, is defined as the potential risk that a Bank’s borrower or counterparty will fail to meet
its obligations. The Bank has developed credit rating models in order to assess credit risk per
category of loan portfolios. Furthermore, the Bank, based on prior experience loan portfolio
evaluation, is able to establish policies in order to limit credit risk.
In order to analyze the credit risk, the Bank on a monthly basis monitors the ageing analysis of the
total loan portfolio as well as the collectability of defaulted loans. The Bank has developed an
impairment loss provision model based on historical performance of the loan book and the actual
data of recoveries. The booked impairment allowances cover the expected/estimated credit losses
as calculated by the provisioning model.
In the context of the continuous alignment with the Basel II[I] supervisory requirements and the
reinforcement of credit risk management processes the Bank has started to design and develop
new models of credit risk management.
The Board of Directors and the Management of the Bank, is responsible for setting up and
operating appropriate management structures that will further improve Bank’s Corporate
Governance. In that context, and for managing credit risk, the Bank has established the Credit
Committee.
Market Risk
Market risk is the risk that movements in market factors, such as foreign exchange rates, interest
rates, credit spreads, equity prices and commodity prices, will reduce the income or the value of
the Bank’s portfolios.
The Bank is mainly exposed to interest rate risk, which is monitored on a regular basis, with the use
of appropriate measures/ratios and the results are communicated on a monthly basis to the
shareholders and Asset Liability Committee (ALCO). The Bank has minimal interest rate risk which is
limited to the repricing of interest bearing assets (interbank deposits and its sovereign bonds
portfolio), since the largest part of the loan book includes fixed rate loans.
Liquidity risk
Liquidity risk is the risk that the Bank does not have sufficient financial resources to meet its
obligations as they fall due or that it can only do so at an excessive cost. Funding risk is the risk
that funding considered to be stable, and therefore used to fund assets, becomes not sustainable
over time.
Liquidity risk arises from mismatches in the timing of cash flows, whereas funding risk arises when
illiquid asset positions cannot be funded at the expected terms and when required.
As at 31/12/2016 the Bank has cash and cash equivalents of 18mln and during the years 2015 and
2016 the Bank has fully repaid its debt obligations amounting to 113mln. The Bank is currently
comfortably above the Bank of Greece Ratio A and B liquidity thresholds and LCR since the Bank’s
liabilities consist mainly of Equity.
Credicom Consumer Finance Bank Directors’ Report Year ended 2016
9
Related parties
As at 31/12/2016, the Bank’s related parties are i) entities of the Credit Agricole group (including E-
Rent) and ii) key management personnel. The balances and the profit and loss impact of
transactions with related parties for the period 1/1/2016 – 31/12/2016, are explained in note 23 of
the financial statements.
Environmental issues
Due to the nature of the Bank’s activities, the actual and potential impact to the environment from
the Bank’s activities, is not significant.
Labor issues
The Bank offers a working environment of equal opportunities to all staff, where rights deriving
from the local regulation are respected. Furthermore, the Bank supports its personnel through
trainings and other activities.
Anastasia Sakellariou
Chief Executive Officer
London, 5 September 2017
Credicom Consumer Finance Bank Financial Statements Year ended 2016
10
Financial Statements
Income Statement and statement of comprehensive income
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Credicom Consumer Finance Bank Financial Statements Year ended 2016
11
Income Statement
amounts in € thousands Reference
Year ended
31.12.2016
Year ended
31.12.2015
Interest income 6 1.678 5.669
Interest expense 6 (353) (1.501)
Net interest income
1.325 4.168
Fee and commission income 7 305 1.367
Net Banking Income
1.630 5.535
Dividend income 8 - 107
Other operating income 9 1.838 2.851
Operating income
3.468 8.493
Operating expenses 10,11,16 (7.887) (9.495)
Profit before impairments and provisions
(4.419) (1.002)
Reversals of impairment and impairment losses on
loans and advances to customers 13 4.062 (1.234)
Other impairment losses and provisions 15 (2.068) -
Profit / (loss) before tax
(2.425) (2.236)
Income Tax 12 12.007 -
Profit / (loss) after tax
9.582 (2.236)
Statement of comprehensive income
amounts in € thousands Reference
Year ended
31.12.2016
Year ended
31.12.2015
Profit / (loss) after tax for the year
9.582
(2.236)
Other comprehensive income -
-
-
Total comprehensive income for the year
9.582
(2.236)
The above income statement and statement of comprehensive income should be read in conjunction with
the accompanying notes
Credicom Consumer Finance Bank Financial Statements Year ended 2016
12
Balance Sheet
amounts in € thousands Reference 31.12.2016 31.12.2015
ASSETS
Cash & cash equivalents 14 17.540 879
Loans & advances to customers
(net of loan loss reserves) 13 19.126 46.168
Bond loans - 801
Investment in E-Rent 15 - 2.068
Property, Plant & Equipment 16 594 750
Intangible assets 16 193 519
Deferred tax assets 12 12.007 -
Other assets 17 1.177 1.611
Total assets 50.637 52.796
LIABILITIES
Due to customers 18 591 577
Due to banks 19 - 11.173
Voluntary Exit Plan provision 20 2.690 2.811
Other liabilities 21 1.563 2.017
Total liabilities 4.844 16.578
EQUITY
Share capital 22 48.700 48.700
Share premium 22 133.053 133.053
Reserves - 7
Retained earnings (135.960) (145.542)
Total equity 45.793 36.218
Total equity and liabilites 50.637 52.796
The above balance sheet should be read in conjunction with the accompanying notes
Credicom Consumer Finance Bank Financial Statements Year ended 2016
SME (stock financing) 586 284 4.374 5.244 2.082 3.162
Total 34.467 14.012 28.095 76.575 30.406 46.168
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
41
3.1.3 Analysis of neither past due nor impaired loans and advances to customers
The geographical concentration of loan exposures is in Greece.
Analysis of neither past due nor impaired loans and advances
to customers As at 31.12.2016
amounts in €
thousands Satisfactory
Total neither past
due nor impaired
Retail
Consumer Loans 11.342 11.342
Credit cards 1.040 1.040
Other 665 665
Wholesale
SME (stock
financing) 145 145
Total 13.191 13.191
As at 31.12.2015
amounts in €
thousands Satisfactory
Total neither past
due nor impaired
Retail
Consumer Loans 28.889 28.889
Credit cards 3.638 3.638
Other 1.354 1.354
Wholesale
SME (stock
financing) 586 586
Total 34.467 34.467
3.1.4 Aging Analysis of past due but not impaired loans and advances to customers by
product line
Aging Analysis of past due but not impaired loans and
advances to customers by product line
As at 31.12.2016
Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other retail
loans
SME
(stock
financing)
Total past
due but not
impaired
1-29 days past due
3.064
440
229
34
3.767
30-59 days past due
969
165
93
8
1.235
60-89 days past due
413
92
42
16
563
90-179 days past due
-
-
-
-
-
180-360 days past due
-
-
-
-
-
>360 days past due
-
-
-
-
-
Total
4.446
697
364
57
5.565
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
42
As at 31.12.2015 Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other retail
loans
SME
(stock
financing)
Total past
due but not
impaired
1-29 days past due
7.571
1.190
423
211
9.394
30-59 days past due
2.582
521
124
67
3.294
60-89 days past due
1.039
206
72
6
1.324
90-179 days past due
-
-
-
-
-
180-360 days past due
-
-
-
-
-
>360 days past due
-
-
-
-
-
Total
11.192
1.918
619
284
14.012
3.1.5 Movement in impaired loans and advances to customers by product line
Impaired loans and advances to customers
As at 31.12.2016 Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other
retail
loans
SME
(stock
financing)
Total
impaired
Opening balance
14.054
7.654
2.012
4.374
28.095
New impaired loans during the
year
514
364
62
(46)
894
Transfers to non impaired
(229)
(50)
(7)
(12)
(298)
Repayments from impaired
loans
(1.503)
(838)
(112)
(150)
(2.603)
Write offs
(6.066)
(3.547)
(877)
(633)
(11.123)
Gross value of impaired
loans
6.770
3.583
1.078
3.534
14.965
Impairment loss reserves
(2.930)
(1.551)
(467)
(3.534)
(8.481)
Carrying amount of
impaired loans
3.840
2.032
611
0
6.484
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
43
As at 31.12.2015 Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other
retail
loans
SME
(stock
financing)
Total
impaired
Opening balance
27.994
14.759
3.086
5.244
51.083
New impaired loans during the
year
2.785
1.577
432
94
4.887
Transfers to non impaired
(169)
(55)
(12)
(19)
(255)
Repayments from impaired
loans
(4.268)
(2.396)
(219)
(220)
(7.102)
Write offs
(12.289)
(6.231)
(1.274)
(725)
(20.519)
Gross value of impaired
loans
14.054
7.654
2.012
4.374
28.095
Impairment loss reserves
(5.581)
(3.039)
(799)
(1.737)
(11.156)
Carrying amount of
impaired loans
8.474
4.615
1.213
2.637
16.939
3.1.6 Aging Analysis of impaired loans and advances to customers by product line
Aging Analysis of impaired loans and advances to
customers by product line
As at 31.12.2016
Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other
retail
loans
SME (stock
financing)
Total
impaired
1-29 days past due
-
-
-
-
-
30-59 days past due
-
-
-
-
-
60-89 days past due
-
-
-
-
-
90-179 days past due
126
37
5
-
168
180-360 days past due
172
49
12
-
233
>360 days past due
3.541
1.947
595
-
6.083
Total 3.840 2.032 611 - 6.484
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
44
As at 31.12.2015 Retail Wholesale
amounts in € thousands Consumer
Loans
Credit
cards
Other
retail
loans
SME (stock
financing)
Total
impaired
1-29 days past due
-
-
-
-
-
30-59 days past due
-
-
-
-
-
60-89 days past due
-
-
-
-
-
90-179 days past due
587
165
53
1.981
2.786
180-360 days past due
503
168
139
9
819
>360 days past due
7.383
4.282
1.020
648
13.333
Total 8.474 4.615 1.213 2.637 16.939
3.1.7 Repossessed collaterals
During the year the Bank has repossessed 91 cars (2015: 400) while 127 cars have been sold
during 2016 (2015: 398).
3.1.8 Interest income recognized by quality of loans and advances to customers by
product line
Interest income includes the “unwinding” of Loan Loss Allowances i.e. the time effect related to
the discounting of the expected recovered values (2016: -€680 thousand; 2015: €286
thousand).
3.1.9 Forbearance
Responding to the challenges of the current economic environment, the Bank has several
forbearance measures in place align with Banking Code of Conduct to manage its loan
exposure.
Such measures include:
interest-only payments;
grace period;
capitalization of arrears whereby arrears are added to the principal balance;
reduced payment plans;
arrears repayment plan;
loan term extensions;
interest rate reduction;
collateral’s voluntary surrender
partial debt forgiveness and
combination of several of the above measures.
Since December 2015, the Bank has initiated a ‘Proactive Discount Policy’ which is applicable to
loan exposure with payment delay of more than 90 days. This policy has significantly increased
the amount of loan write offs, but has also improved recovery rates. The Bank also monitors
the historical evolution of acceptance of this policy by clients and per portfolio category (i.e.
Buckets 3, 4, litigated and write off). In parallel, the Bank is actively implementing the
framework created by the Bank of Greece and has stratified its portfolio into cooperative and
non-cooperative clients.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
45
3.1.9.1 Forborne loans and advances to customers by type of forbearance measure
Forborne loans and advances to customers by type of
forbearance measure
amounts in €
thousands 31.12.2016 31.12.2015
Measures
Repayment plan
-
-
Reduced payments
-
-
Grace period
-
-
Loan term extension
10
52
Capitalisation of arrears
121
49
Partial debt forgiveness
91
247
Combination of the
above
-
-
Total 222 348
3.1.9.2 Credit quality of forborne loans and advances to customers
Credit quality of forborne loans and advances to customers
As at 31.12.2016
amounts in € thousands
Total loans and
advances to
customers
out of which
Forborne % of forborne
Neither past due nor
impaired
13.191
77 0,6%
Past due but not impaired
5.565
265 4,8%
Impaired loans
14.965
49 0,3%
Gross values
33.721
392 1,2%
Impairment loss reserves
(14.595)
(169) 1,2%
Carrying amount
19.126
222 1,2%
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
46
As at 31.12.2015
amounts in € thousands
Total loans and
advances to
customers
out of which
Forborne % of forborne
Neither past due nor
impaired
34.467
166 0,5%
Past due but not impaired
14.012
325 2,3%
Impaired loans
28.095
86 0,3%
Gross values
76.575
577 0,8%
Impairment loss reserves
(30.406)
(229) 0,8%
Carrying amount
46.168
348 0,8%
3.1.9.3 Reconciliation of forborne loans and advances to customers
Reconciliation of forborne loans and advances to customers
amounts in € thousands 31.12.2016 31.12.2015
Opening balance (carrying
amount)
348
1.369
Forbearance during the
years
392
582
Accrued interest
49
13
Repayments
(373)
(154)
Transfers out of
forbearance status during
the year
(179)
(1.448)
Impairment losses
(14)
(14)
Total
222
348
3.1.9.4 Forborne loans and advances to customers by product line
Forborne loans and advances to customers by product line
amounts in € thousands 31.12.2016 31.12.2015
Retail
Consumer Loans
186
303
Credit cards
11
17
Other
22
20
Wholesale
SME (stock financing)
4
8
Total
222
348
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
47
3.2 Market Risk
Market risk is the risk that movements in market factors, such as foreign exchange rates,
interest rates, credit spreads, equity prices and commodity prices, will reduce the income or the
value of the Bank’s portfolios.
Interest rate risk
The Bank is mainly exposed to interest rate risk, which is monitored on a regular basis, with the
use of appropriate measures/ratios and the results are communicated on a monthly basis to
the shareholders and Asset Liability Committee (ALCO). The Bank has minimal interest rate risk
which is limited to the repricing of interest bearing assets, since loans have been fully repaid
during 2016 and the largest part of the loan book includes fixed rate loans.
The repricing of assets and liabilities are presented in the table below.
Interest rate risk
December 31st, 2016
amounts in € thousands Up to 1
month
from 1 to
3 months
from 3 to
12 months
Over 12
months
Non
interest
bearing
Total
Cash & cash equivalents
17.540
-
-
-
-
17.540 Loans & advances to
customers
2.558
565
4.299
11.704
-
19.126
Other assets
-
-
-
-
1.177
1.177
Total assets
20.098
565
4.299
11.704
1.177
37.843
Due to customers
591
-
-
-
-
591
Other liabilities
-
-
-
-
1.563
1.563
Total liabilities
591
-
-
-
1.563
2.153
Repricing gap
19.508
565
4.299
11.704
(386)
35.690
December 31st, 2015
Total assets
5.354
981
10.350
60.502
(24.390)
52.797
Total liabilities
577
-
-
11.000
5.002
16.579
Repricing gap
4.777
981
10.350
49.502
-
65.610
Foreign exchange risk
The Bank is not exposed to foreign exchange risk as all its transactions are in Euro.
Price risk
The Bank is not exposed to equity securities price risk as the Bank does not hold any equity
securities at fair value. The Bank is not exposed to commodity price risk either.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
48
Liquidity management
Liquidity risk is the risk that the Bank does not have sufficient financial resources to meet its
obligations as they fall due or that it can only do so at an excessive cost. Funding risk is the risk
that funding considered to be sustainable, and therefore used to fund assets, is not sustainable
over time.
Liquidity risk arises from mismatches in the timing of cash flows, whereas funding risk arises
when illiquid asset positions cannot be funded at the expected terms and when required.
The Bank’s liquidity profile is presented in the table below. In the table are presented the cash
outflows resulting from financial liabilities as of the reporting dates. The amounts presented in
the table are the contractual undiscounted cash flows.
Liquidity risk
December 31st, 2016
amounts in €
thousands
Up to 1
month
from 1 to
3 months
months
months
from 3 to
12 months
Over 12
months Total
Due to customers
591
-
-
-
591
Other liabilities
239
344
6
974
1.563
Total liabilities
830
244
6
974
2.153
December 31st, 2015
Due to banks
-
-
-
11.173
11.173
Due to customers
577
-
-
-
577
Other liabilities
230
375
879
534
2.017
Total liabilities
807
375
879
11.707
13.767
As at 31/12/2016 the Bank has cash and cash equivalents of 18mln and during the years 2015
and 2016 the Bank has fully repaid its debt obligations amounting to 81mln and for the 2 year
period. The Bank is currently comfortably above the Bank of Greece Ratio A and B liquidity
thresholds and LCR.
4. Capital management
The regulatory framework regarding minimum capital adequacy requirements is described by
Directive 2013/36/EU (CRD IV) and Regulation EU 575/2013 (CRR).
Regulation EU 575/2013 (Pillar 1) sets the minimum capital requirements, whereas Directive
2013/36/EU provides Competent Authorities, at their discretion and following the Supervisory
Review and Evaluation Process (‘SREP’), the right to set additional capital and liquidity
requirements, based on the Bank’s profile.
Credicom uses the standardized approach for the measurement of its Risk Weighted Assets. As
presented in the below table, the Bank’s capital adequacy ratio is above the minimum
threshold of 8%.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
49
5. Critical estimates and judgements
The preparation of the financial statements requires the use of estimates and assumptions
which affect the reported assets and liabilities, the recognition of contingent liabilities, as well
as the recognition of income and expenses in the financial statements, as well as items
recognized in the financial statements of the next financial year, including relevant disclosures.
The areas below involve a high degree of uncertainty and have a material impact on the
financial statements:
5.1 Impairment losses on loans and advances to customers
Loan impairment allowances represent management’s best estimate of losses incurred in the
loan portfolios at the balance sheet date. Management is required to exercise judgment in
making assumptions and estimates when calculating loan impairment allowances on both
individually and collectively assessed loans and advances.
Collective impairment allowances are subject to estimation uncertainty, in part because it is not
practicable to identify losses on an individual loan basis due to the large number of individually
insignificant loans in the portfolio. The estimation methods include the use of statistical
analyses of historical information, supplemented with significant management judgement, to
assess whether current economic and credit conditions are such that the actual level of
incurred losses is likely to be greater or less than historical experience. Management has
performed ‘look back’ procedures to calibrate the existing roll rate methodology.
Risk factors include unemployment rates and bankruptcy trends, account management policies
and practices, changes in laws and regulations, and other influences on customer payment
patterns. The methodology and the assumptions used in calculating impairment losses are
reviewed regularly in the light of differences between loss estimates and actual loss experience.
In this context, management has changed its estimates regarding the recoveries time window
used for the calculation of Loss Given Defaults (LGDs), from 36 months to 12 months and
based on monthly weighted average basis. The rationale for this change is:
a. The calibration of the model parameters to be compatible to the results of ‘look back’
procedures performed for 31/12/2016,
b. The continuing decrease of sensitive loan book outstandings,
c. The positive effect of the Proactive Discount Policy in the recovery rates
d. The stabilization of the economy and the need to use representative recoveries/LGDs,
which do not include the turbulent period of 2015, and
e. The removal of political/macro risk parameter from the loan loss provision
methodology, initially factored in the model during Q4 of 2014.
The effect of this change is presented in the below table:
Capital management
amounts in € thousands
Year
ended
31.12.2016
31.12.2016
Year
ended
31.12.2015
Risk Weighted Assets
40.765
68.922
Tier 1 Capital
37.376
35.699
Tier I and Tier II ratio 91,7% 51,8%
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
50
Effect of changes in accounting estimates
New Previous
amounts in € thousands
Year
ended
31.12.2016
Year
ended
31.12.2016
Reversals of impairment and impairment
losses on loans and advances to customers
4.062
816
Loan loss reserves (Balance Sheet)
14.595
17.843
Gross loans
33.721
33.721
Gross loans coverage ratio (cash
coverage) 42,5% 50,3%
Loans in arrears for over 90dpd: coverage
by Loan Loss Reserves 90,6% 103,4%
A 5% decrease in the overall recovery rates would increase the loan loss reserves for loans and
advances to customers by 1.7mln.
5.2 Tax
Income tax comprises current tax and deferred tax. Income tax is recognized in the income
statement except to the extent that it relates to items recognized in other comprehensive
income or directly in equity, in which case the tax is recognized in the same statement as the
related item appears. Current tax is the tax expected to be payable on the taxable profit for the
year and any adjustment to tax payable in respect of previous years. Credicom provides for
potential current tax liabilities that may arise on the basis of the amounts expected to be paid
to the tax authorities.
Deferred tax is recognized on temporary differences between the carrying amounts of assets
and liabilities in the balance sheet, and the amounts attributed to such assets and liabilities for
tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods in
which the assets will be realized or the liabilities settled. Current and deferred tax is calculated
based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.
The recognition of a deferred tax asset relies on an assessment of the probability and
sufficiency of future taxable profits, future reversals of existing taxable temporary differences
and ongoing tax planning strategies. In the absence of a history of taxable profits, the most
significant judgements relate to expected future profitability.
In this context and considering management’s assessment of the going concern assumption,
the approved by the competent authorities Business Plan has been used in order to estimate
future taxable profits.
The approved Business Plan includes the following revenue streams:
o Lending activities (wholesale, retail)
o Investment advisory services and
o NPLs servicing fees.
According to the Business Plan, the Bank will change its operating model to a “Challenger”
Bank, based on the successful examples of other European countries. The Bank’s
transformation process is expected to mature by 2020-2021.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
51
Management has followed a prudent approach based on which deferred tax assets have been
recognized only on temporary differences that relate to loan loss reserves and accounting write
offs, which under the current legislation expire within 20 years. No deferred tax assets have
been calculated on temporary differences and tax losses that expire within the next 5 years.
Management will revisit this approach as the business plan is implemented.
Based on management's assessment as at 31 December 2016 the recognition of deferred tax
assets was restricted to Euros 12m at that date which represents future deductible temporary
differences relating to loan impairment losses as more fully described in Note 12.
5.3 Provisions
Provisions are recognized when it is probable that an outflow of economic benefits will be
required to settle a present legal or constructive obligation that has arisen as a result of past
events and for which a reliable estimate can be made.
Judgement is involved in determining whether a present obligation exists and in estimating the
probability, timing and amount of any outflows. Professional expert advice is taken on the
assessment of litigation, property (including onerous contracts) and similar obligations.
Provisions for legal proceedings and regulatory matters typically require a higher degree of
judgement than other types of provisions. When matters are at an early stage, accounting
judgements can be difficult because of the high degree of uncertainty associated with
determining whether a present obligation exists, and estimating the probability and amount of
any outflows that may arise.
As a result, it is often not practicable to quantify a range of possible outcomes for individual
matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in
aggregate for these types of provisions because of the diverse nature and circumstances of
such matters and the wide range of uncertainties involved.
6. Interest income and interest expense
The composition of net interest income is presented below:
Interest Income and expense
amounts in € thousands Period
1.1.2016 -
31.12.2016
Period
1.1.2015 -
31.12.2015 Interest income
Interbank placements
6
13
Bond loan interest income
2
8
Loans and advances to
customers
1.670
5.648
Total
1.678
5.669
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
52
Interest Expense
Interbank placements
(253)
(1.380)
Time deposits
(16)
(13)
Other interest
(84)
(108)
Total
(353)
(1.501)
Net interest income
1.325
4.168
The reduction in interest income from Loans and advances to customers, is in line with the
decrease of the loan book during 2016 and the lower interest expense relates to the repayment
of the intragroup funding from Credit Agricole.
7. Fee and commission income
The Bank earns fees from the administration of loans.
Commission income
amounts in € thousands Period 1.1.2016
- 31.12.2016
Period
1.1.2015 -
31.12.2015
Subscriptions and cash withdrawals via credit
cards
-
-
Lending related fees and commissions
305
1.367
Insurance fees and commissions
-
-
Total fee income
305
1.367
The reduction of net fee income is due to the significant decrease of the loan book during the
period.
8. Dividend income
Dividend income
amounts in € thousands Period
1.1.2016 -
31.12.2016
Period
1.1.2015 -
31.12.2015
Income from shares and other variable-
yield securities
-
107
Total dividend income
-
107
The amount recorded in period 1.1.2015 – 31.12.2015 relates to dividend received from the
former subsidiary Credicom Insurance Brokers SA, upon the completion of its liquidation.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
53
9. Other operating income
The analysis of other income is as follows:
Other operating income
amounts in € thousands Period 1.1.2016
- 31.12.2016
Period 1.1.2015
- 31.12.2015
Rental income
29
39
Other income
1.809
2.812
Total net other income
1.838
2.851
Other Income includes mainly cash recoveries of the written-off portfolio amounting €1,6mln in
2016.
10. Personnel cost
The analysis of personnel cost is as follows:
Personnel costs
amounts in € thousands Period 1.1.2016
- 31.12.2016
Period 1.1.2015
- 31.12.2015
Wages, salaries and
performance
remuneration
3.102 3.121
Social security costs 550 609
Termination benefits (205) (906)
Other benefits 201 181
Total personnel costs 3.648 3.005
The number of personnel employed as at 31 December 2016 was 55 (2015: 64).
The positive effect on the Termination benefits relates to the movement of the Voluntary Exit
Plan provision (see note 20).
11. Other Operating Expenses
The analysis of operating expenses is as follows:
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
54
Other Operating Expenses
amounts in € thousands Period 1.1.2016
- 31.12.2016
Period 1.1.2015
- 31.12.2015
Third parties fees and
expenses
1.743
3.448
Service Providers' fees
1.140
1.297
Fees and taxes
346
474
Other Expenses
527
618
Total
3.756
5.837
The evolution of operating expenses is in line with the decline in the business activity. During
2016, there have been no advertising and other promotion expenses, which have to be
disclosed under the provisions of art.4, L.4374/2016.
12. Income tax and deferred tax
In accordance with the provisions of the enacted Greek Tax Law (Law 4172/2013), as amended
by Law 4334/2015 (Gazette Α΄80/16.07.2015) and being in effect today, the income tax rate for
Greek legal entities increased from 26% to 29% from the tax year 2015 and thereon. A tax rate
of 10% is imposed on dividend income acquired until 31.12.2016, whereas from 1.1.2017 and
thereon, the tax rate increases to 15% after the voting of Law 4389/2016.
Income tax
amounts in € thousands 31.12.2016 31.12.2015
Current tax
-
-
Deferred tax
12.007
-
Total income tax
12.007
-
The tax obligation for the year ended 31/12/2016 is zero. The reconciliation of the income tax
expense is presented below:
amounts in € thousands 31.12.2016 31.12.2015
Loss before tax 2.425 2.237
Tax at the applicable tax rate 29% 703 649
Tax effect of the following items:
- non deductible expenses (471) (17)
- unrelieved tax losses for the year (987) (488)
- unrecognised net deductible/taxable temporary differences 755 (211)
- deferred tax assets on previously unrecognised deductible
temporary differences 12.007 -
- change in tax rate - 67
Total relief / (charge) 12.007 0
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
55
Deferred income taxes are calculated on all deductible temporary differences under the liability
method as well as for unused tax losses at the rate in effect at the time the reversal is expected
to take place.
As explained in section “Critical Estimates and judgments” the Bank has recognized deferred
tax assets of €12mln as at 31st December 2016 on the basis that the Bank is a going concern,
based on the approved by the competent authorities Business Plan.
Deferred tax assets comprise:
amounts in € thousands 31.12.2016 31.12.2015
Total deferred tax assets
31.638
18.471
less: deferred tax assets not recognised
(19.631)
(18.471)
Deferred tax asset recognised
12.007
-
The deferred tax asset recognised relates to the following temporary differences:
amounts in € thousands | DTA / (DTL) 31.12.2016 31.12.2015
Loan impairment and accounting write
offs
12.007
-
According to L.4172/2013 Art.27 par. 3, the write off of debtors’ debts resulting from a final
write off or a debt settlement agreement of debtors’ loans or credits, is tax deductible in 20
annual and equal installments, starting from the tax year in which the final write-off of the debt
or the transfer of the loan or credit was performed, respectively. The total amount of the debit
difference cannot exceed the amount of the aggregated provisions of credit risk, which have
been formed for accounting purposes by June 30, 2015, which amounted to €41.8mln.
Under the provisions of Law 4456/2017, Art.43 par.1, the Bank is eligible to amortize over the
20-year period, the losses incurred in cases where they relate to transfers or write-offs of debts
either due to a court or an out of court settlement or contractual arrangement of the loan
existing in the balance sheet as of June 30, 2015. The tax benefit of the 20-year amortization
period is granted only to realized losses.
The total eligible amount of credit risk provisions for the Bank amounts to €41.4 mln as at
31/12/2016 that give rise to deferred tax asset on loan impairment and accounting write offs of
€12mln.
The Bank has not recognized deferred tax assets of 19.6mln on other temporary differences
and unused tax losses of 68mln, which expire within the next 5 years.
Audit Tax certificate
For the fiscal years 2011, 2012 and 2013 the Bank and all Greek Societe Anonyme Companies
were subject to compulsory tax audit in accordance with L. 2238/1994 art.82, which was
conducted by the same statutory auditor that issues the audit opinion on the statutory financial
statements. Credicom has been issued with an unqualified "Tax Compliance Report" for each
year respectively. This report is submitted to the Ministry of Finance. In case of a non-qualified
Tax Compliance Report, a tax audit by the regulatory authorities is not initially performed, but
only if certain criteria defined by the Ministry of Finance, are met.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
56
For fiscal years 2014 and 2015, all Greek Societe Anonyme and Limited Liability Companies that
were required to prepare audited statutory financial statements were obliged to obtain
additionally an “Annual Tax Certificate” as provided by article 65A of Law 4174/2013. Credicom
has been issued with an unqualified tax certificate for both years.
Regarding 2016, L.4174/2013 was amended after the voting of Law 4410/2016, which stated
that from 2016 and thereon the issue of the “Annual Tax Certificate” is optional. The Tax
Administration retains its right to proceed with a tax audit, within the applicable statute of
limitations in accordance with article 36 of Law 4174/2013. Credicom engaged the tax auditors
to audit the fiscal year 2016 and the relevant unqualified tax audit certificate was issued on July
26, 2017.
13. Loans and advances to customers
Loans and advances to customers include mainly consumer financing and wholesale lending.
Since 2013, the Bank has been in a Stop Any New Financing Activity process, following the
previous shareholders’ strategy to disinvest from Greece. This strategy has led to a significant
decrease in the loan book outstanding of approximately 88% for the period 2013-2016, out of
which an amount of 134mln relates to write offs and an amount of approximately 113mln
relates to repayments.
The analyses of the loan portfolios and the respective impairment loan loss reserves are
presented below:
Loans & advances to customers
amounts in € thousands 31.12.2016 31.12.2015
Retail lending
Credit cards 5.316 13.198
Consumer loans 22.498 53.988
Other retail loans 2.103 3.976
Total retail
29.917 71.162
Wholesale
Stock financing 3.735 5.241
Bond loans - 800
Total wholesale 3.735 6.041
Accrued interest 69 173
Gross Loans & advances to customers 33.721 77.376
Less: Impairment loan loss reserves (14.595) (30.406)
Carrying amount of Loans and advances to customers 19.126 46.969
Floating rate loans 4.803 11.485
Fixed rate loans 28.918 65.890
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
57
The fair value of the loans outstanding does not vary significantly to their book values due to
the fact that the remaining loans outstanding relate to recent vintages with relatively high
credit spreads.
The movement of the impairment loss reserves per product line is presented below.
Impairment allowance for loans and
advances to customers
amounts in € thousands 31.12.2016 31.12.2015
Retail and wholesale
Balance at 1 January
30.406
51.177
Reversal of impairment loss for the year
(4.062)
1.234
Amounts written off
(11.749)
(22.004)
Balance at 31 December
14.595
30.406
Retail
Balance at 1 January
28.324
48.729
Impairment loss for the year
(3.449)
739
Amounts written off
(10.668)
(21.144)
Balance at 31 December
14.206
28.324
Wholesale
Balance at 1 January
2.082
2.448
Impairment loss for the year
(613)
495
Amounts written off
(1.081)
(860)
Balance at 31 December
388
2.082
The reversal of the impairment loss for 2016 amounting to 4.1mln reflects mainly the retail
portfolio (3.4mln) in line with the better macro environment and the improved recoveries
compared to 2015 (see note 5.1).
14. Cash and cash equivalents
The Bank’s cash and cash equivalents comprise of cash in hand and cash in central banks, as
well as deposits in other credit institutions.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
58
Cash and balances with central banks
amounts in € thousands 31.12.2016 31.12.2015
Cash in hand
24
18
Balances with the central bank
7.488
1
Total cash and balances with central banks
7.512
19
Due from credit institutions
amounts in € thousands 31.12.2016 31.12.2015
Placements and other receivables from domestic
banks
9.936
694 Placements and other receivables from banks
abroad
92
165
Total due from credit institutions
10.028
860
During Q1 2016, the Bank has fully repaid its debt obligation to the Credit Agricole group and
since then, excess liquidity from the loan cash receipts have been placed mainly in Alpha Bank,
a Greek systemic bank, and the Central Bank of Greece.
For the purpose of the cash flow statement, cash and cash equivalents comprise the following
balances with less than 90 days maturity from the date of their acquisition.
Cash and cash equivalents
amounts in € thousands 31.12.2016 31.12.2015
Cash and balances with central banks
7.512
19
Due from credit institutions
10.028
861
Total cash and cash equivalents
17.540
880
15. Investment in E-Rent
As at 31/12/2016 the Bank had only one investment, 100% of the issued shares of E-Rent.
Investment in E-Rent
Name
Country of
Recommendation
% Ownership
31.12.16
Balance
31.12.2016
in €
% Ownership
31.12.15
Balance
31.12.2015
in €
E-Rent
(ΕΜΠΟΡΙΚΗ RENT
ΜΑΚΡΟΧΡΟΝΙΕΣ
ΜΙΣΘΩΣΕΙΣ
ΟΧΗΜΑΤΩΝ Α.Ε.)
GREECE 100,0% 1 100,0% 2.068.250
Total carrying
amount
1
2.068.250
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
59
Subsidiary companies
Affiliates
amounts in €
thousands 31.12.2016 31.12.2015
31.12.2016 31.12.2015
Balance at the beginning
of the period
2.068
2.128
-
-
Investments Additions - -
- -
Impairement of
Investments
(2.068)
(60)
-
-
Balance at period end 0 2.068
- -
Following the acquisition of Credicom by AMC and the designation of E-Rent as non core
activity, management has decided to disinvest from E-Rent. On 23/3/2017 a SPA was signed
between the Bank and the unrelated entity ‘Atithasos Shipping and Trading S.A.” whereby E-
Rent was sold for €1. This transaction has been considered as an impairment indication for the
31/12/2016 carrying amount of the investment in the Bank’s books and therefore, an adjusting
post balance sheet event. As at 31/12/2016 the Bank’s investment in E-Rent has been written
down to the value of the consideration received and the impairment loss has been debited to
the profit and loss item “Other impairment losses and provisions”.
16. Property, Plant & equipment and intangible assets
As at 31.12.2016, property, plant & equipment and intangible assets are as follows.
Property, plant & equipment and
intangible assets
Intangible
Assets Tangible Assets
amounts in € thousands Software
Properties Plant &
Equipement Total
Cost 31.12.2015 8.697
721
3.378 4.098
Accumulated depreciation 31.12.2015
(8.178)
(268)
(3.080)
(3.348)
Net Book Value 31.12.2015 519
452
298
750
Cost :
Balance at 1.1.2016 8.697
721
3.378 4.098
Additions -
-
-
-
Disposals and write-offs -
-
(44)
(44)
Balance at 31.12.2016 8.697
721
3.334
4.054
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
60
Accumulated depreciation:
Balance at 1.1.2016
(8.178)
(268)
(3.080)
(3.348)
Charge for the year
(326)
(29)
(128)
(157)
Disposals and write-offs -
-
44 44
Balance at 31.12.2016
(8.504)
(297)
(3.163)
(3.461)
Net Book Value 31.12.2016 193
423
170
594
Depreciation expense for 2016 amounts to 0.5mln, out of which 0.3mln relate to intangible
assets and 0.2mln relates to property, plant & equipment. Depreciation expense is included in
line item “Operating Expenses” of the income statement.
17. Other assets
Other assets include the following items.
Other assets
amounts in € thousands 31.12.2016 31.12.2015
Prepaid expenses and accrued income
163
141
Other receivables and advances
1.014
1.470
Total Other assets
1.177
1.611
The line items “Other receivables and advances” involve transactions that take place during the
normal course of business and which are settled within a short time period.
18. Due to customers
The line item “Blocked deposits, guarantee deposits and other accounts (ΤΕΚΕ)“ refers to
mandatory float rating deposits to Hellenic Deposits and Investment Guarantee Fund ( TEKE ),
in accordance with the Bank of Greece ‘s regulatory framework.
Due to customers
amounts in € thousands 31.12.2016 31.12.2015
Savings and current accounts (ΤΕΚΕ)
591
577
Total
591
577
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
61
19. Due to Banks
The analysis of line item “Due to banks” is as follows.
Due to banks
amounts in € thousands 31.12.2016 31.12.2015
Borrowings from international
financial and other institutions
-
11.000
Accrued interest due to credit
institutions
-
173
Total
-
11.173
During Q1 2016, the Bank proceeded to full repayment of interbank loans originally obtained
from CASA and CACF.
20. Voluntary Exit Plan provision
The Bank has not calculated personnel retirement obligations based on an actuarial report,
since a voluntary exit plan provision has been calculated for all the personnel up to 21 February
2017.
Voluntary exit plan
provision
amounts in € thousands 31.12.2016 31.12.2015
Balance at 1 January
2.811
3.608
Cost for the current year
250
(378)
Usage of provisions
(455)
(528)
Remeasurements
84
108
Balance at 31 December
2.690
2.811
21. Other liabilities
The analysis of accruals and other liabilities is as follows.
Other liabilities
amounts in € thousands 31.12.2016 31.12.2015
Deferred income and accrued expenses
746
665
Suppliers
244
375
Tax payables
134
99
Standard legal personnel retirement indemnity
obligations
105
121
Other liabilities
333
757
Total other liabilities
1.563
2.017
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
62
22. Share capital and share premium
- On 18.05.2007, the Extraordinary General Meeting of Shareholders decided an increase of
the share capital of € 1.500.000. A total of 500,000 new registered shares of nominal value
€ 3 and a disposal price of € 30 each were issued. The total amount paid amounted to €
15,000,000. The total share capital of the Bank after the aforementioned increase
amounted to € 38.700.000.
- On 23.07.2007, the Extraordinary General Meeting of Shareholders decided an increase of
the share capital of € 1.800.000. A total of 600,000 new registered shares of nominal value
€ 3 and a disposal price of € 30 each were issued. The total amount paid amounted to €
18,000,000. The total share capital of the Bank after the aforementioned increase
amounted to € 40.500.000.
- On 26.11.2007, the Extraordinary General Meeting of Shareholders decided an increase of
the share capital of € 900.000. A total of 500,000 new registered shares of nominal value €
3 and a disposal price of € 30 each were issued. The total amount paid amounted to €
9,000,000. The total share capital of the Bank after the aforementioned increase amounted
to € 41.400.000.
- On 23.05.2008, the Extraordinary General Meeting of Shareholders decided an increase of
the share capital of € 1.800.000. A total of 600,000 new registered shares of nominal value
€ 3 and a disposal price of € 30 each were issued. The total amount paid amounted to €
18,000,000. The total share capital of the Bank after the aforementioned increase
amounted to € 43.200.000.
- On 17.02.2010, the Extraordinary General Meeting of Shareholders decided an increase of
the share capital of € 5.499.000. A total of 1.833.333 new registered shares of nominal
value € 3 and a disposal price of € 30 each were issued. The total amount paid amounted
to € 54.999.990. The total share capital of the Bank after the aforementioned increase
amounted to € 48.699.999.
The composition of share capital is as follows.
Share capital
31.12.2016 31.12.2015
Number of shares
16,233,333
16,233,333
Nominal value per share
3
3
Share capital in €
48.699.999
48.699.999
23. Related party transactions
Related parties as at 31/12/2016 include CACF and CASA, which mainly provided funding as
mentioned in note “Due to Banks”.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
63
Related Party Transactions
Interest expense attributable to
shareholders and other related parties
amounts in € thousands Year ended
31.12.2016
Year ended
31.12.2015
CACF
158
1.170
CASA
-
-
Total
158
1.170
a) Transactions with key management personnel
Short term benefits for key management personnel as at 31.12.2016 amount to €0.8mln (2015:
0.6mln).
b) Transactions & balances with subsidiaries and associate companies
Subsidiaries
amounts in € thousands 31.12.2016 31.12.2015
Assets
Loans and advances to customers
-
801
Other assets
102
120
Total
102
921
Liabilities
Other liabilities
19
47
Total
19
47
Income
Net interest income
2
8
Dividend income
-
107
Property rentals
29
31
Support services
82
92
Total 113 238
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
64
Expenses
Other operating expenses
70
90
Total 70 90
Associate Companies
amounts in € thousands 31.12.2016 31.12.2015
Assets
Fee Receivable 0 0
Other assets 36 0
Total 36 0
Liabilities
Other liabilities 0 0
Total 0 0
Income
Management fees 0 0
Total 0 0
Expenses
Management fees - CACF 48 118
Software Licenses - GECICA 53 62
Total 101 180
24. Contingent liabilities and other commitments
There are some legal proceedings against the Bank in the normal course of business. Against
these exposures, the Bank has booked provisions of 0.2mln as at 31st December 2016. The final
outcome of these legal proceedings is not expected to have a significant impact on the Bank’s
financial position.
Regarding other commitments, as at 31st December 2016 the Bank has booked provisions of
0.1mln.
25. Subsequent events
Management has identified the following subsequent events:
1. As at 17/2/2017 and following the approval by the European Competent Authorities
(ECB/SSM and Bank of Greece), the Bank has been fully acquired by Atlas Merchant
Capital LLC through its affiliate AMC Oak Sarl, a Luxembourg entity. The ultimate
purchaser is Atlas Merchant Capital Fund LP (‘AMC’) which is an investment fund
specializing in the financial services industry, particularly in areas of growth and
opportunity with a focus on investment management.
2. On 23/3/2017 the subsidiary E-Rent was sold for Euro 1 to the unrelated entity ”Atithasos
Shipping and Trading S.A.”. This has been evaluated as an adjusting post balance sheet
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
65
event and the investment in E-Rent as at 31/12/2016 has been written down to the value
of the consideration received.
3. On 23/6/2017, Moody's upgraded Greece's sovereign bond rating to Caa2 and changed
the outlook to positive. The drivers were the successful conclusion of the 2nd review under
the 3rd Program, the improved fiscal prospects for the coming years and reversal in the
debt trend and the tentative signs of a stabilization of the economy.
4. On 25/7/2017 the Hellenic Republic sold €3bn worth of its new five-year bond, at a
coupon of 4.625%, lower than 4.95% which was the coupon of the last bond sale in 2014.
5. During May and June 2017, the Bank has proceeded with purchases of Greek Treasury Bills
of nominal value of 15mln.
6. On 18 August 2017, Fitch Ratings upgraded Greece's long-term foreign-currency issuer
default ratings to 'B-' from 'CCC', citing reduced political risk and sustained GDP growth.
London, 5 September 2017
Chairman of the Board Chief Executive Officer Chief Operating Officer Chief Accountant
Matthew Hansen Anastasia Sakellariou Anastasios Karkazis Panagiotis Tsichlis
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
66
Independent auditors’ report
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
67
[Translation from the original text in Greek]
Independent Auditors’ Report
To the Shareholders of “Credicom Consumer Finance Bank SA”
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Credicom Consumer Finance Bank SA which comprise the statement of financial position as of 31 December 2016, and the statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing which have been transposed into Greek Law (GG/B’/2848/23.10.2012). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
68
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Credicom Consumer Finance Bank SA as of December 31, 2016, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union.
Report on Other Legal and Regulatory Requirements
Taking into consideration, that management is responsible for the preparation of the Board of Directors’ report and Corporate Governance Statement that is included in this report according to provisions of paragraph 5 article 2 of Law 4336/2015 (part B), we note the following: a) In our opinion, the Board of Directors’ report has been prepared in accordance with the
legal requirements of articles 43a of the Codified Law 2190/1920 and the content of the Board of Directors’ report is consistent with the accompanying financial statements for the year ended 31/12/2016.
b) Based on the knowledge we obtained from our audit for the Company “Credicom
Consumer Finance Bank SA” and its environment, we have not identified any material misstatement to the Board of Directors report.
Athens, 8 September 2017
The Certified Auditor
PricewaterhouseCoopers S.A
Certified Auditors
268 Kifisias Avenue
152 32 Halandri Konstantinos Michalatos
SOEL reg. no. 113 SOEL reg. no. 17701
Credicom Consumer Finance Bank Notes to the Financial Statements Year ended 2016
69
Availability of the Financial Statements
The Financial Statements accompanied by their Auditor’s Report and the Directors’ Report, are