Eurobank posts €732m profit — Hellenic Bank stake ‘paves way for consolidation’

Eurobank this week posted an adjusted net profit of €732 million for the first half of 2024, an increase of 22.2 per cent year-on-year, while reported net profit stood at €721 million.

In addition, the bank’s financial results for this period showed that earnings per share stood at €0.20, while the return on tangible book value (RoTBV) stood at 18.5 per cent.

“Eurobank has recently achieved several milestones,” said Eurobank CEO Fokion Karavias, referencing the dividends the bank distributed to its shareholders, the first time this has happened since 2007.

Karavias also said that “after more than ten years, Eurobank regained investment grade status by two rating agencies, Moody’s and DBRS”.

“In Cyprus, we became the majority shareholder in Hellenic Bank with a 55.9 per cent stake, paving the way for full consolidation, which will create a regional banking group with €100bn balance sheet,” the Eurobank CEO said.

“The bank maintains a systemic presence and plays a pivotal role in each of its three key markets: Greece, Cyprus, and Bulgaria,” he added.

Karavias also said that the macroeconomic environment remains favourable in all regions in which the bank operates.

“Greece is still outperforming the average GDP growth of the eurozone,” he said, noting that “the labour market is robust and investments are accelerating, bolstered by RRF and additional European funds”.

“We are on track to reach or exceed the ambitious targets we have set for the year,” he stated.

He supported this by referencing the “noticeable uptick in loan requests, faster deposit gathering and flow in assets under management higher than anticipated“.

The bank’s total operating income increased by 9.7 per cent compared to the same period in 2023, reaching €1.46 billion.

This growth, the results showed, was driven by an 8.6 per cent rise in net interest income, which totalled €1.13bn, supported by loans, bonds, and international operations.

Net fee and commission income also grew by 4.7 per cent year-on-year, amounting to €283m.

Eurobank’s core operating profit before tax improved significantly, rising 15.5 per cent year-on-year to €814m.

This was bolstered by a reduction in loan loss provisions, which decreased by 12.6 per cent to €144m, reflecting the bank’s improved credit quality.

What is more, the core pre-provision income increased by 10.2 per cent to €958m.

Operating expenses saw a modest increase of 3.1 per cent year-on-year at a group level, reaching €457m, largely due to operations in Southeast Europe (SEE).

However, in Greece, operating expenses decreased by 1.2 per cent year-on-year. The cost to core income and cost to total income ratios improved to 32.3 per cent and 31.3 per cent, respectively.

Eurobank’s SEE operations were particularly strong, with adjusted net profit from this region increasing by 35.5 per cent to €277m, contributing nearly 38 per cent to the group’s profitability.

In Cyprus and Bulgaria, adjusted net profit reached €176m and €100m, respectively.

The bank’s asset quality also showed positive trends, with the non-performing exposures (NPE) ratio falling by 2.1 percentage points year-on-year to 3.1 per cent. Provisions over NPEs improved significantly, reaching 93.2 per cent.

Eurobank’s capital adequacy remained solid, with the total capital adequacy ratio (CAD) and common equity tier 1 (CET1) ratio standing at 19.3 per cent and 16.2 per cent, respectively, on a pro-forma basis.

This includes the impact of the full consolidation of Hellenic Bank, where Eurobank has become the majority shareholder with a 55.9 per cent stake.

Furthermore, the bank’s tangible book value per share increased by 18.4 per cent year-on-year to €2.25, reflecting the bank’s strong financial position.

Eurobank’s total assets reached €81.3bn, with performing loans growing organically by €1.2bnduring the first half of the year.

Customer deposits also rose by €1.2bn to €58.6bn, while the liquidity coverage ratio was a robust 181.7 per cent.

Moreover, the bank’s management revised its full-year 2024 RoTBV target upwards from approximately 15 per cent to around 16.5 per cent, reflecting its strong performance and positive outlook.

“Eurobank produced another solid set of results in the first half,” Karavias said.

“EPS amounted to 20 cents, tangible book value per share increased to €2.25, while RoTBV reached 18.5 per cent,” he added.

“Indications of a sustained economic climate coupled with our robust results in the first half of the year, have prompted us to an upward revision of the RoTBV target to around 16.5 per cent for the full year,” the Eurobank CEO concluded.