• Earnings Per Share (EPS): EUR0.20 for the first half of 2024.
• Tangible Book Value Per Share: Increased to EUR2.25.
• Return on Tangible Book Value: 18.5%.
• Net Interest Income: Up 9% year on year.
• Fees: Increased by 5% year on year.
• Cost to Income Ratio: Reached a new low at 32%.
• Core Pre-Provision Income: Up by 10% year on year at EUR958 million.
• NPL Ratio: Stood at 3.1%.
• Coverage Ratio: 93%.
• Cost of Risk: Declined to 69 basis points from 81 basis points in the previous year.
• Core Operating Profit: EUR814 million, up by 16% year on year.
• Net Profits: EUR732 million for the first half of the year.
• Fully Loaded CET1 Ratio: 16.2% as of June 2024.
• Group Loans: Increased by EUR1.2 billion in the first half of 2024.
• Group Deposits: Increased by EUR1.4 billion in the second quarter.
• Net Loan to Deposit Ratio: Stable at 72%.
• Net Interest Margin: 283 basis points for the first half of the year.
• Commission Income: Reached EUR147 million, a record performance.
• Operating Costs: Lower year on year in Greece by 1.2%.
• Core Profit Expectation: Expected to exceed EUR1.6 billion for the full year 2024.
• Return on Tangible Book Value (Revised): Estimated at circa 16.5% for the full year 2024.

• Warning! GuruFocus has detected 2 Warning Sign with EGFEF.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Eurobank Ergasias Services And Holdings SA (EGFEF) achieved investment-grade status by two agencies, Moody's and DBRS, for the first time since 2011.
• The company reported a strong financial performance with earnings per share of EUR0.20 and a return on tangible book value of 18.5% for the first half of 2024.
• Net interest income increased by 9% year on year, surpassing projections, while fees grew by 5% year on year.
• The acquisition of a majority holding in Hellenic Bank in Cyprus is expected to create a regional banking group with a balance sheet size of EUR100 billion, offering significant growth potential.
• Eurobank exceeded its sustainability targets, with 20% of corporate loan disbursements classified as sustainable, and revised its full-year 2024 goals upwards, expecting a return on tangible book value of around 16.5%.

Negative Points

• The cost of risk, although declining, remains a concern at 69 basis points compared to 81 basis points in the first half of the previous year.
• Net interest income slightly decreased quarter-over-quarter by 1.8% due to factors such as lower Euribor and higher deposit costs.
• The NPL ratio, while stable, remains at 3.1%, indicating ongoing challenges in asset quality.
• The company faces potential challenges in realizing synergies from the Hellenic Bank acquisition, with full business plan details expected only in early 2025.
• The effective tax rate for the full year 2024 is expected to be close to 32%, which could impact net profitability.

Q & A Highlights

Q: Could you elaborate on the potential synergies between Hellenic Bank and Eurobank, and clarify the guidance on cost of risk? A: Fokion Karavias, CEO, explained that synergies are expected in net interest income through higher loan balances, fee and commission income, and operational cost rationalization. The cost of risk is anticipated to be around 70 basis points, contributing to the upward revision of return on tangible equity.

Q: Does the core operating guidance include Hellenic Bank's contribution for the remaining quarters, and have there been any changes in hedging positions? A: Harris Kokologiannis, CFO, confirmed that the guidance assumes Hellenic Bank's line-by-line consolidation from the third quarter, with no changes in assumptions. Fokion Karavias noted that hedging positions have increased, impacting net interest income by EUR27 million.

Q: What is the outlook for loan growth in the second half, and is there potential to increase the stake in Hellenic Bank? A: Harris Kokologiannis stated that the bank is on track to meet its full-year loan growth target of EUR2.3 billion, with variations in the mix. Fokion Karavias reiterated that merging Hellenic Bank and Eurobank Cyprus is a long-term goal, dependent on minority shareholders.

Q: Can you provide details on the hedging strategy and NPE formation trends? A: Fokion Karavias explained that hedging is dynamic, with an average maturity of five years. NPE formation was EUR125 million in the first half, with stable asset quality dynamics. The NPE ratio is expected to remain around 3% through regular write-offs.

Q: How will the MOU with Eurizon impact asset management and fee income? A: Fokion Karavias highlighted that the agreement with Eurizon adds to Eurobank's open architecture in private banking, enhancing the asset management offering. Asset management is integral to Eurobank's strategy, with strong growth in managed funds and private banking assets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.