At 55.9% the percentage of shares after the public Offer
File photo.
The merger of Eurobank and Hellenic Bank remains the ultimate goal, Fokion Karavias, CEO of Eurobank Holdings, said at a press conference where he presented the Group's first half 2024 results on Wednesday, noting that the timetable for achieving this goal is not entirely up to the mark. from Eurobank, but also from the smaller shareholders.
The acquisition of Hellenic Bank's share capital was at the center of the discussion of Eurobank's financial results. Following the completion of the mandatory public takeover offer for the acquisition of up to 100% of the issued share capital of Hellenic Bank, Eurobank's total direct participation amounts to 55.886%.
“We became the majority shareholder of Hellenic Bank with a percentage of 55.9%, paving the way for its full accounting consolidation, which will create a Banking Group with €100 billion in assets. We have a systemic presence and a leading role in all three of our core markets , Greece, Cyprus and Bulgaria”, said Mr. Karavias in his presentation.
Asked about the planned synergies with Hellenic Bank and the next steps, he said that with the completion of the mandatory public takeover offer and having secured the majority of the share capital, the next step is the election of the new Board of Directors, which will be elected at the next meeting of the shareholders, and which will appoint the new management of the Bank.
As he said, in the immediate future the two banks will continue to work as separate entities. “That's fine, as their business models are quite complementary,” he said.
Referring to planned synergies going forward, he said that this discussion will begin once the new management is in place, noting that synergies appear possible in a number of areas, such as increasing net interest income, increasing fee and commission income, through and integration of CNP, the reduction of MREL costs of Hellenic, the rationalization of operating expenses. He clarified, however, that a full business plan for Hellenic will be presented in the 2024 full-year results in early 2025 and as part of the group's 2025-2027 three-year plan. “We will give quantitative targets for the implementation of the synergies”, he said.
When asked how they intend to proceed with regard to the further acquisition of share capital in Hellenic, Mr. Karavias said that “the merger of the two banks remains our ultimate goal, we are confident that this will happen over time. However, the exact timing depends not only on us, but also on the minority shareholders”.
Financial results of the first half of 2024
Referring to the financial results of the first half of 2024, Mr. Karavias during his presentation said that Eurobank, for the first time since 2007, distributed a dividend to its shareholders. After more than ten years, it regained investment grade from two rating agencies, Moody's and DBRS.
“The macroeconomic environment remains positive in all countries where we operate. Greece continues to perform well above the Eurozone average in terms of GDP growth. The labor market is strong and investment is accelerating, supported by the Recovery Fund and Reconstruction as well as other European resources. We are on track to meet or exceed the goals we have set for the year. Loan demand, deposits and funds under management are growing at a higher rate than expected.
He added that Eurobank recorded a strong performance in the first half. Earnings per share stood at 20 cents, tangible book value per share increased to €2.25, while return on equity reached 18.5%.
“All indications are converging on maintaining the positive economic environment, leading us to revise upwards our target for return on equity to around 16.5% for 2024,” from 15%, he noted.
According to the results presented, Eurobank Holding's adjusted net profit amounted to €732m, with total net profit reaching €721m.
Deposit lending grew organically by €1.2bn . respectively in the first half of 2024, while client funds under management increased by 32% on an annual basis.
The total capital adequacy ratio (CAD) was at 19.3%, and the CET1 ratio at 16.2%.
The NPL ratio was at 3.1%, with the NPL ratio at 93.2%.
In more detail, net interest income increased by 8.6% compared to the 1st Semester of 2023 and amounted to €1,132 million, mainly due to income from grants, bonds and activities abroad. The net interest margin strengthened on an annual basis by 20 basis points and reached 2.83%.
Net fee and commission income increased by 4.7% year-on-year in the first half of 2024 and reached €283 million, mainly due to income from Network operations and Asset Management, corresponding to 71 basis points over the of total assets.
As a result of the above, organic revenues increased by 7.8% on an annual basis to €1,415 million. Total revenues increased by 9.7% compared to the 1st Half of 2023 to €1,460 cm.
Operating expenses decreased in Greece by 1.2% on an annual basis, while they increased at Group level by 3.1% to €457 million, due to activities abroad. However, on a comparable basis (excluding BNP Bulgaria) they remained unchanged. Both the cost-to-revenue ratio and the cost-to-total revenue ratio improved further to 32.3% and 31.3% respectively in H1 2024.
Organic earnings before provisions increased by 10, 2% on an annual basis to €958 million, while total profits before provisions increased by 13% compared to the 1st Half of 2023 to €1,003 million.
Provisions for bad debts decreased by 12.6% compared to of the 1st Semester 2023 to €144 million and corresponded to 69 basis points on average loans.
As a result of the above, organic operating profit before taxes increased by 15.5% year-on-year in the first half of 2024 to €814m.
Adjusted net profit increased by 22.2% year-on-year to €732m in H1 2024. Total net profit was €721m and includes a €99m gain from the acquisition of an additional stake in Hellenic Bank of Cyprus as well as €101 million in costs from the voluntary departure of employees in Greece. Earnings per share and return on tangible equity stood at €0.20 and 18.5% respectively.
Overseas operations were profitable with adjusted net profit increasing by 35.5% year-on-year to €277m and contributing 37.8% to the Group's overall profitability. Organic profit before provisions increased by 25.3% to €292m and organic operating profit before tax increased by 27.6% to €264m. in the first half of 2024. Operating performance in both Cyprus and Bulgaria strengthened significantly, with adjusted net profits amounting to €176 million and €100 million respectively in the first half of 2024.
The ratio of non-performing exposures (NPEs) decreased year-on-year by 2.1 percentage points to 3.1%. The formation of new NPEs was positive by €125m in the first half of 2024. The coverage of NPEs from the cumulative provisions increased by 20 percentage points on an annual basis and reached 93.2%.
Capital adequacy remained at strong levels, with the total capital adequacy ratio (CAD) and CET1 common equity ratio standing pro-forma at 19.3% and 16.2% respectively, taking into account the impact of the Hellenic Bank consolidation and the distribution of a dividend of €342 million.
Tangible equity per share stood at €2.25 at the end of the First Half of 2024 and was increased by 18.4% compared to the corresponding Half of 2023.
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Total assets amounted to €81.3 billion.
According loans increased organically by €1.2 billion in the first half of 2024. Total loan balances (before provisions) amounted to €43, 4 billion, including high- and medium-grade bonds amounting to €4.3 billion. Business loans amounted to €25.8 billion, housing loans to €9.8 billion and consumer loans to €3.6 billion.< /p>
Customer deposits increased by €1.2 billion in the first half of 2024 to €58.6 billion. The loan-to-deposit ratio stood at 72% and the liquidity coverage ratio at 181.7% at the end of H1 2024. Eurosystem funding decreased by €4.3 billion year-on-year to €3.1 billion at the end of June 2024.
Client funds under management in Greece increased by 32.2% on an annual basis and amounted to €6.4 billion. at the end of the 1st Semester 2024. Additionally, the assets and liabilities of private banking clients at Group level increased by 15% on an annual basis in the same period and amounted to €12.2 billion.
