Banks exceed expectations
Interest income, high liquidity, cost containment boost financial results, analysts note
The “big four” Greek banks – Alpha, Eurobank, National and Piraeus – posted impressive first-half results, analysts say, focusing on their strong profitability and its main underlying cause, interest and commission fees, but also the quality of their assets and their liquidity, which led all to adjust their end-year goals upward.
NBG Securities notes that banks had a very strong second quarter, with improving trends in pre-provision income. This reflects interest rate hikes by the European Central Bank, the expanded loan portfolio, with new disbursements totaling €8.8 billion, and the improvement in operating expenses resulting from successful containment of costs. The higher turnover helped with the rising commission fees. Also, continuing offloading of nonperforming loans to funds enhanced the quality of their portfolio. Liquidity stayed high, as well.
Optima Bank notes that second-quarter results outperformed its own, and the wider market’s, expectations, as profits were higher than expected and writeoffs of bad loans lower. Also, all four banks’ capital positions were strengthened and liquidity was plentiful, Optima notes.
Specifically, combined net profit rose 31% quarter-on-quarter to €1.03 billion and average Tier 1 capital, which acts as a cushion in the event of a financial crisis, increased by 0.7% to 14.7%.
Net interest income rose 8% in the second quarter to €2.02 billion and income from commissions was up 11% to €471 million. Non-core income was €112 million or just 4% of total income. Total income rose 10% quarter-on-quarter to €2.37 billion.
Provisions for the impact of nonperforming loans rose 67%, but this was heavily affected by Piraeus’ restructuring of the nonperforming part of its own portfolio that cost €498 million, with average cost of risk rising to 0.84% from 0.76% in the first quarter of 2023. Nonperforming exposures fell by €256 million to €9.06 billion, with net nonperforming exposures at €3.68 billion.
As Alpha Bank CEO Vasilios Psaltis noted, “top-line growth continues to dominate the picture as tailwinds from higher rates are further strengthened by our active commercial policy.”
