Greek lenders Eurobank, NBG boosted by higher rates, lower bad loans

Eurobank and National Bank, Greece’s two largest lenders by market value, were profitable in the first nine months of 2022 as higher rates boosted net interest income.

Eurobank, Greece’s largest lender by market value, reported higher net profit in the nine months of 2022 compared to the same period a year earlier, boosted by stronger net interest, fee and commission income.

The bank reported net earnings of 1.106 billion euros ($1.12 billion) up from 216 million in the first nine months of 2021. Net profit included gains of 231 million euros from the spin-off of its merchant acquiring business.

“On a backdrop of economic and geopolitical uncertainties, the Greek economy remains a positive outlier, with a growth rate estimate now at 6% for the year,” said Eurobank’s Chief Executive Fokion Karavias.

He said the bank’s performance exceeded guidance across all lines, with international activities a “steady contributor,” increasing profit by almost 40%.

Improvements in the economy and lower problem loans prompted ratings agency Moody’s to upgrade Greek banks earlier this week.

Eurobank grew net interest income by 8.1% year-on-year in the nine months to 1.1 billion euros, driven by bond income, lending and its international business.

Net fee and commission income rose 21.1% to 395 million euros, mainly from lending activities, network operations and its cards business.

The bank’s non-performing loan exposure (NPE) ratio fell to 5.6% at the end of September with the stock of bad loans decreasing to 2.4 billion euros.

Peer National Bank (NBG), Greece’s second-largest by market value, reported lower net earnings in the first nine months of 2022 compared to the same period a year earlier on the back of lower trading income.

NBG, 40 percent owned by the country’s HFSF bank rescue fund, said net earnings from continued operations reached 652 million euros ($661 million) from 732 million euros in the first nine months of 2021.

CEO Paul Mylonas said tourism was helping to drive economic growth and revenues were on track to reach a new all-time high while private sector profitability was also helping to cushion the inflationary induced shock to the real economy.

Amid the European Central Bank’s tighter policies, including the tightening of targeted longer-term refinancing operations (TLTRO), NBG’s strong and stable core deposit base and excess liquidity “become a strong comparative advantage,” he said.

NBG’s NPE dropped by about 20 basis points quarter-on-quarter to 5.9% at end-September, already below its 2022 target of about 6%. [Reuters]