Interest income leap for three banks
Three of the four major banks – Eurobank, National and Piraeus – that have published first-half results – Alpha Bank will do so this week – have declared income from interest above 3 billion euros, well up from the €1.8 billion recorded in the first half of 2022.
This was a significant factor in helping the banks’ core profits after tax exceed a combined €2.5 billion, compared to €1.3 billion a year ago.
Interest income was helped by the expanding loan portfolio but is mainly the result of interest rates that were negative in mid-2022 but reached 3.6% in June 2023 and continue to inch higher, at a much reduced clip. The banks’ profitability was also spurred by the higher fees new loan disbursements bring. Profits from financial operations were limited in the first half of the year.
All three banks plan to offer their shareholders a dividend next year. They have also raised their expectations about return on tangible equity and earnings per share.
National Bank now forecasts return on tangible equity to be above 15% in 2023 and to stay above 13% in 2025; the previous estimates were 11% and 12%, respectively. Earnings per share should reach €1.10 this year and stay at that level until 2025, the previous estimates being €0.75 and €0.90, respectively. In the first half of the year, earnings per share were €1.11.
Eurobank projects return on tangible equity above 15% this year, up from 13% in its previous estimate. It also raised its forecast for earnings per share to €0.28 from €0.13. Earnings per share in the first half were €0.18.
Piraeus Bank says its return on tangible equity will reach 14% in 2023, up from a previous estimate of 12%. It has also increased its earnings-per-share estimate for the whole year to €0.65 from €0.55 that it had forecast in May. This would almost double the first-half performance of €0.33.
