Eurobank Group on Thursday said its consolidated net profits totaled 149 million euros in the January-September period.
Fokion Karavias, the bank’s CEO, commenting on the results said: “As the Greek economy steadies on a positive growth trajectory, Eurobank continues to implement a twin-pronged strategy based on our accelerated plan for the cleanup of our balance sheet, while gradually but increasingly shifting our focus to growing our business and to making the most out of the current phase of the economic cycle.
"With regard to the NPE stock, after completing the first securitization of an NPE portfolio in the previous quarter (project Pillar), we have received binding offers for the large-scale, multi-asset-class securitization (Project Cairo) and the sale of a majority stake of our market-leading servicer subsidiary FPS (Project Europe), with a view of signing a binding agreement within 2019. The relevant transactions are expected to close in the first quarter of 2020. Following the initiatives of the Government and the European Authorities to formulate a system-wide Asset Protection Scheme (APS), we plan to opt-in for all the senior notes of the Cairo securitization. In the first nine months of the year, total NPE stock was reduced by 2.8 billion euros.
"The NPE ratio improved by almost 8 percentage points year-on-year to 31.1%. Eurobank remains on a track of sustained profitability. Total profit came at 149 million euros, with a distinct contribution from our solid and growing international activities. CET1 ratio increased by 40 bps in the quarter to 16.3%, while total CAD climbed to 18.6%, the highest among our peers. In the new economic environment in our main market, Greece, with heightened consumer confidence, increasing asset prices, especially in real estate, and more positive prospects, our priority is now to grow our business. Furthermore, interest for investments and privatizations in a number of sectors is upbeat and Eurobank aims to play a key role in advisory and financing such projects. Performing loan book expanded organically by 1.5 billion and deposits increased by 4.8 billion euros year-on-year, underlining the capacity of our business model to produce results.
"We are focusing on providing innovative solutions for new needs arising for our clients as the Greek economy picks up and both households and businesses adapt to a post-crisis landscape. Along these lines, we led the market in revisiting mortgages and introduced the first fixed-rate long-term mortgage product. Overall, our performance in the third quarter is proof of Eurobank’s ability to achieve all its business goals, to serve our clients and to support the economy to a sustained growth path.”
Eurobank’s performance in the nine months of 2019 was positive. Net profit at a Group level reached 149 million euros. Net interest income receded by 3.0% to 1,031 million euros, but was up by 1.1% (quarterly) to 346 million. Net interest margin was 2.25% in versus 2.49% in the respective period of 2018. Net fee and commission income were up by 15.2% (annual) to 250 million euros, mainly due to Grivalia rental income of 29 million and higher fees from the branch network activities.
On a quarterly basis, net fee and commission income increased by 4.9% to 94 million euros and accounted for 60 basis points on total assets. Expansion was driven both by Greek and International activities (+3.0% quarterly and +9.2% quarterly, respectively). Core income remained stable in at 1,281 million euros and rose by 1.9% quarterly to 440 million. Total operating income receded by 1.3% annually and 7.4% quarterly due to lower other income. Operating expenses, decreased by 2.0% annually in Greece and were flat at a Group level. Core pre-provision income declined by 2.9% annually to 609 million but increased by 1.0% quarterly to 210 million. Pre-provision income receded by 5.2% annually to 693 million euros and 15.9% quarterly to 223 million. In terms of asset quality, further progress has been achieved.
The NPE formation was negative by 515 million in the nine-month period and by 195 million in the third quarter. The NPE ratio decreased by 7.9 percentage points annually to 31.1% at the end of September. The stock of NPEs was down by 2.8 bn, of which 0.5 bn in the third quarter. Provisions over NPEs increased by 140 basis points annually to 55.1%. There is significant progress in the negotiations for the 7.5 bn multi-asset securitization (Cairo) and our loan-servicer (FPS) transactions, as binding offers have been received. Eurobank's target is to sign the binding agreements before year-end.
Loan loss provisions fell by 3.9% annually to 493 million euros and 21.0% quarterly and accounted for 180 basis points of the average net loans. International operations remained profitable, as net profit stood at 139 million euros. CET1 was up 40 bps quarterly to 16.3% and total CAD increased to 18.6%, the highest in the domestic market.
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