Eurobank swings to profit in 2021, to start paying dividend

Eurobank, Greece’s largest lender by market value, swung back in to profit in 2021 on the back of lower provisions for impaired loans and higher commission income, it said on Thursday.

The bank, which is 2.4% owned by the country’s HFSF bank rescue fund, reported net profit of €328 million, in line with consensus, versus a loss of €1.215 billion in 2020.

“Completing our balance sheet clean-up plan, we were the first systemic bank with a single-digit NPE ratio of 6.8%, a turning point for Greece’s banking system after a 10-year financial crisis,” Chief Executive Fokion Karavias said, referring to the non-performing exposure ratio.

Eurobank’s net fee and commission income grew 18.7% year-on-year to €456 million, mainly due to fees from network activities, rental income and lending.

That more than offset a 2.1% drop in net interest income to €1.321 billion, with the net interest margin dropping to 1.84% from 2.03%.

Eurobank’s operations outside Greece were profitable with adjusted net earnings reaching €148 million last year.

The bank’s business plan for 2022-24 set a target of 13% average earnings per share growth per year and more than 100 basis points of capital generation annually out of profits.

The bank will begin to pay dividends out of this year’s earnings, with the planned payout ratio seen at around 20%, it said.

Its business plan also aims for a 200 basis-point rise in its core equity Tier-1 ratio to 14.6% in 2024.

Karavias said it was too early to assess how deeply the Ukraine crisis will affect Greece’s economy after a year of impressive recovery. But fundamentals for a positive scenario were still in place.

“As Greece exits a decade of deleveraging, the economic recovery will be investment-driven and banks have a crucial role to play. We are in pole position to capitalise on this growth cycle and our profits will be based on loan growth,” he said. [Reuters]