The operating performance of Eurobank in 9M2023 was robust.

Fokion Karavias, CEO of Eurobank said:  “The third quarter of the year was marked by strong  results, as well as two other significant developments: Eurobank was the first systemic bank from which the HFSF divested. Additionally, the agreement to increase our stake in the Hellenic Bank of Cyprus to 55%, further strengthening our franchise.

The macroeconomic environment in all our three core markets - Greece, Cyprus and Bulgaria - is supportive, despite a weak eurozone performance. Greece stands out with an expected growth rate of ca 2.3% for 2023 and a forecast to continue outperforming over the next two years. Growth prospects, solid public finances, together with banking sector balance sheet strengthening, were the primary drivers for the sovereign’s return to investment grade, which has been a multi-year milestone.

We are focusing our efforts on financing our customers, notably to fully exploit the low-cost funding opportunities through the RRF and the SME-targeted programmes of the Hellenic Development Bank. Beyond growing organically, we aim to make good use of our excess capital, by exploring market opportunities, as evidenced by the agreement to increase our stake in Hellenic Bank, subject to Regulatory approvals.

In the nine months results were solid and tangible book value per share increased by 16% to 1.97 euro. Our capital position remains robust with a Total Capital ratio of 19.5%. The downward trend in NPEs continued, with the ratio brought under 5%, the lowest in 15 years.

We have committed to create value to our shareholders. The completion of the 1.4% share buy-back this year will be followed by a cash dividend payment out of 2023 financial results next year.” 

Specifically:

▪ Net interest income rose by 55.3% y-o-y in 9M2023 to €1,601m, driven by loans, bonds, derivative products and international business. Net interest margin increased by 92 basis points y-o-y to 2.70%.

▪ Net fee and commission income expanded by 6.2% y-o-y to €403m, mainly due to fees from lending activities and accounted for 68 basis points of total assets in 9M2023.

▪ As a result of the above, core income grew by 42.1% y-o-y to €2,004m in 9M2023. Total operating income was up by 0.5% y-o-y to €2,034m in 9M2023.

▪ Operating expenses increased by 5.9% y-o-y to €673m, mainly due to SEE operations, inflationary pressures and investments in IT. The cost to core income ratio improved to 33.6% in 9M2023, from 45.0% in 9M2022, while the cost to income ratio was 33.1%.

▪ Core pre-provision income was up by 71.8% y-o-y to €1,331m, whereas pre-provision income declined by 2.0% y-o-y to €1,362m in 9M2023.

▪ Loan loss provisions increased by 31.8% against 9M2022 to €255m and corresponded to 84 basis points of the average net loans.

▪ As a result of the above, core operating profit before tax rose by 85.1% y-o-y to €1,077m in 9M2023.

▪ Adjusted profit before tax amounted to €1,112m and adjusted net profit totaled €916m in 9M2023. EPS reached €0.26 and the return on tangible book value5 amounted to 18.0% in 9M2023. Reported net profit reached €980m, compared to €1,106m in 9M2022 and mainly included €111m negative goodwill from Hellenic Bank in Cyprus.

▪ SEE operations were profitable, as the adjusted net profit increased to €342m in 9M2023, from €145m in 9M2022. Core pre-provision income grew by 85.3% y-o-y and amounted to €377m, with core operating profit before tax risingby 78.9% y-o-y to €335min 9M2023.

▪ The NPE ratio fell to 4.9%in 9M2023, from 5.6% in 9M2022. NPE formation was positive by €167m in 9M2023. The stock of NPEs decreased by €249m y-o-y to €2.1bn or €0.5bn after provisions. Provisions over NPEs improved from 73.7% in 9M2022 to 75.0% in 9M2023.

▪ Total CAD reached 19.5%6 and FLCET1 16.8%6 in 9M2023, up 230 and 260 basis points y-o-y respectively.

▪ Tangible book value per share increased by 20.9% y-o-y to €1.97.

▪ Total assets stood at €80.5bn in 9M2023.

▪ Performing loans grew organically by €0.7bn in 9M2023. Total gross loans amounted to €42.2bn at the end of September, including senior& mezzanine notes of €4.5bn. Corporate loans stood at €24.3bn, mortgages at €10.0bn and consumer loans at €3.4bn.

▪ Customer deposits rose by €1.0bn in 9M2023 to €56.5bn. The loans to deposits ratio was 72.0% and the liquidity coverage ratio 170.6% in 9M2023. Eurosystem funding was reduced by €7.4bn y-o y to €4.2bn at the end of September 2023.

Glossary - Definition of Alternative Performance Measures (APMs) and other selected financial measures/ ratios

❖ Adjusted net profit: Net profit/loss from continuing operations after deducting restructuring costs, goodwill impairment/ gain on acquisition, gains/losses related to the transformation plan, contributions to restoration initiatives following natural disasters and income tax adjustments.

❖ Basic Earnings per share (EPS): Net profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period, excluding the average number of ordinary shares purchased by the Group and held as treasury shares.

❖ Common Equity Tier 1 (CET1): Common Equity Tier I regulatory capital as defined by Regulation (EU) No 575/2013 as in force, based on the transitional rules for the reported period, divided by total Risk Weighted Assets (RWA).

❖ Core Operating Profit: Core pre-provision income minus impairment losses relating to loans and advances charged in the reported period.

❖ Core Pre-provision Income (Core PPI): The total of net interest income, net banking fee and commission income and income from non banking services minus the operating expenses of the reported period.

❖ Cost to core income: Total operating expenses divided by total core operating income. Core operating income is the total of net interest income, net banking fee and commission income and income from non banking services.

❖ Cost to Income ratio: Total operating expenses divided by total operating income.

❖ Fees and commissions: The total of net banking fee and commission income and income from non banking services of the reported period.

❖ Fees and commissions over assets ratio: The total of net banking fee and commission income and income from non banking services of the reported period divided by the average balance of continued operations’ total assets (the arithmetic average of total assets, excluding those related to discontinued operations’ at the end of the reported period, at the end of interim quarters and at the end of the previous period).

❖ Fully loaded Common Equity Tier I (CET1): Common Equity Tier I regulatory capital as defined by Regulation No 575/2013 as in force, without the application of the relevant transitional rules, divided by total RWA.

❖ Income from trading and other activities: The total of net trading income, gains less losses from investment securities and other income/ (expenses) of the reported period.

❖ Loans to Deposits ratio: Loans and advances to customers at amortised cost divided by due to customers at the end of the reported period.

❖ Liquidity Coverage Ratio (LCR): The total amount of high quality liquid assets over the net liquidity outflows for a 30-day stress period.

❖ Net Interest Margin (NIM): The net interest income of the reported period annualised and divided by the average balance of continued operations’ total assets (the arithmetic average of total assets, excluding those related to discontinued operations at the end of the reported period, at the end of interim quarters and at the end of the previous period).

❖ Non-performing exposures (NPEs): Non Performing Exposures (in compliance with EBA Guidelines) are the Group’s material exposures which are more than 90 days past-due or for which the debtor is assessed as unlikely to pay its credit obligations in full without realization of collateral, regardless of the existence of any past due amount or the number of days past due. The NPEs, as reported herein, refer to the gross loans at amortised cost except for those that have been classified as held for sale.

❖ NPEs formation: Net increase/decrease of NPEs in the reported period excluding the impact of write offs, sales and other movements.