Eurobank Group reports robust first quarter results

Eurobank Holdings this week released its financial results for the first quarter of 2024, showcasing significant growth and robust performance across various metrics, including in its operations in Cyprus.

“Our performance in the first quarter is a great start for the year and makes us confident that our 2024 plan
we’ll be delivered, with a return on tangible book value of 15 per cent,” CEO Fokion Karavias said.

“In addition to the strong operating performance, it is important to highlight that all our strategic initiatives, including Hellenic Bank in Cyprus, are on track,” he added.

The bank reported earnings per share (EPS) of €0.08 and a return on tangible book value (ROTBV) of 19.9 per cent.

The tangible book value (TBV) per share saw a notable increase of 20.2 per cent year-on-year, reaching €2.14.

The adjusted net profit for the quarter was €383 million, while the reported net profit stood at €287 million.

The difference is attributed to the cost of the Voluntary Exit Scheme (VES) in Greece, concluded in February. Organic growth of performing loans amounted to €0.4 billion.

Eurobank’s capital adequacy remained robust, with the total capital adequacy ratio (CAD) rising to 20.2 per cent and the common equity tier 1 (CET1) ratio increasing to 17.2 per cent.

In terms of dividend distribution, Karavias said that “we have submitted the official application to the SSM”.

“The proposed payout ratio is 30 per cent, which corresponds to a dividend higher than 9 cents per share. The supervisory clearance is expected in June,” he explained.

“Dividend distribution should take place right after the AGM approval in late July,” he added.

The non-performing exposures (NPE) ratio improved to 3.0 per cent, down from 5.1 per cent in the same period last year, with provisions over NPEs improving significantly to 92.6 per cent.

Net interest income rose by 13.7 per cent compared to the first quarter of 2023, totalling €571 million. This growth was driven by performance in loans, bonds, and international business, resulting in a net interest margin increase of 34 basis points to 2.87 per cent.

Net fee and commission income also saw an expansion of 4.9 per cent year-on-year, reaching €136 million, primarily due to fees from network activities and asset management.

“Eurobank’s quarterly performance remained solid. With a 20 per cent return, the tangible book value increased to 2.14 euros per share. Regional activities continued their significant contribution, with a net profit of 145 million euros, an increase of more than 80 per cent year-on-year,” the CEO stated.

A particularly positive signal came from loan growth with performing loans showing an increase of 0.4 billion euro. First-quarter performance confirms that credit growth in 2024 will be stronger than last year, especially in Greece,” he added.

Core income grew by 11.9 per cent year-on-year to €707 million, while total operating income surged by 21.8 per cent to €755 million.

Operating expenses decreased by 2.1 per cent in Greece but increased by 3.3 per cent at the group level to €229 million, due to operations in Southeastern Europe (SEE).

Excluding the impact of BNP Bulgaria, operating expenses remained stable. The cost-to-core income ratio and the cost-to-total income ratio improved to 32.4 per cent and 30.3 per cent, respectively.

Core pre-provision income rose by 16.5 per cent year-on-year to €478 million, and pre-provision income increased by 32.0 per cent to €526 million.

Loan loss provisions decreased by 5.5 per cent year-on-year to €71 million, corresponding to 68 basis points of average net loans.

Consequently, core operating profit before tax rose by 21.4 per cent year-on-year to €407 million.

SEE operations significantly contributed to the group’s profitability, with adjusted net profit from these operations increasing to €145 million, up from €79 million in the first quarter of 2023. This represented 37.7 per cent of the group’s total profitability.

Core pre-provision income in SEE grew by 34.4 per cent to €143 million, with core operating profit before tax rising by 34.2 per cent to €128 million.

Financial performance in Cyprus and Bulgaria improved substantially, with adjusted net profits reaching €92 million and €48 million, respectively.

Performing loans grew organically by €0.4 billion in the first quarter, with total gross loans amounting to €42.7 billion, including senior and mezzanine notes of €4.3 billion.

Corporate loans stood at €25.1 billion, mortgages at €9.7 billion, and consumer loans at €3.5 billion.

Customer deposits declined by €0.1 billion to €57.3 billion. Savings and sight deposits accounted for 64 per cent of the total, while time deposits made up 36 per cent.

The loans-to-deposits ratio was 72.5 per cent, and the liquidity coverage ratio was 179.0 per cent. Eurosystem funding was reduced by €5.3 billion year-on-year to €3.0 billion at the end of March 2024.

“The macroeconomic backdrop remains positive in our three core markets and especially in Greece, which had its sovereign outlook upgraded by S&P and continues to be a top growth performer in the eurozone,” Karavias said.

“In this economic environment, Eurobank is best placed to keep growing, converting business growth to robust financial results, rewarding shareholders and contributing to the economy and society,” he concluded.