Second-quarter results will see banks stronger

The temperature is rising in this hot summer for banks, as this week the publication of second-quarter results is set to begin, while the extraordinary general meeting at Emporiki is expected with great interest on August 16. It will focus on the termination of the current social security contract, entry into the new system and the increase of share capital. On Wednesday it will be Piraeus Bank which launches the publication of first-half results, followed on Thursday by EFG Eurobank Ergasias. Alpha Bank will publish its Q2 figures on August 31, while the National Bank of Greece (NBG) will present its data on Sept. 29. Emporiki has not yet announced its date, but, according to sources, it will publish its results within August now that it has resolved its major social insurance problem. All indications – given the high rate of increase in mortgage and consumer loans as well – show that second-quarter results will be excellent for another period. Notably, mortgage loans are showing a rise of 26 percent, while consumer credit is expanding by 33.4 percent. The continuing rise in household loans may be a blessing for the banks’ revenues, but this intense rise (particularly in consumer credit) creates many fears as to whether households will be able to meet their obligations without problems in the future. The only stain in this period, creating some reservations, is the effects of the 20-day bank employees’ strike in June. Worries focus on NBG and Emporiki, which led the industrial action. Alpha, Eurobank and Piraeus operated as normal then, so they are expected to have registered some additional benefits from the days of the two state banks’ inactivity. The battle of prestige between Alpha and Eurobank will also be one to watch. Having recorded high growth rates in the first quarter, Eurobank appears to have found the momentum required to lift it to the second spot in the market, pushing Alpha to third. Yet this will not be at all easy, as Alpha has worked to secure and consolidate its position. The strong growth that banks have enjoyed in 2005 should be beyond doubt as foreign investors continue to increase their exposure in domestic bank stocks. Note that Emporiki’s shares at the end of July (about 5.2 percent of the total) were absorbed by foreign institutionals within just two hours and at quite a high price. This was seen as a vote of confidence for Emporiki’s management and a reward after the government’s determination toward its privatization. Emporiki is also considered one of the most interesting restructuring cases in the European banking sector.

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