NBG outperforms in nine-month results, with impressive ROE

National Bank of Greece beat market expectations with an 87 percent jump in nine-month net profits yesterday, boosted by a mortgage lending boom. The country’s largest lender by assets reported a net profit after minorities of 531.9 million euros ($627 million). Analysts’ forecasts were in a range of between 480 and 509 million euros. «NBG delivered a very solid set of results, further confirming a trend that was evident from other bank results earlier. The improvement in return on equity is impressive,» said trader Nick Diamantopoulos at Kappa Securities’ institutional desk. The bank’s return on average equity (ROE) over the period increased to 29.5 percent from 16.9 percent in the same period last year. National was the third major Greek bank to report strong profits after Piraeus and EFG Eurobank. National Bank said net interest income in the first nine months of the year grew 16.5 percent to 1.233 billion euros, boosted by expanding retail loans in Greece and southeastern Europe. Net interest margin improved by 33 basis points to 3.41 percent. «(The year) 2005 is turning out to be an excellent year for the group, reflecting the dynamic growth of key business lines,» Chairman and Chief Executive Takis Arapoglou said in a statement. «The group’s performance regarding profitability and return on equity exceeds the aspirations of our 2005-07 business plan.» Bumper year Retail credit continued to be the main driver of loan growth with mortgages showing the best performance, a rise of 27.4 percent to 11 billion euros, making up more than one-third of National’s total loan book. «The real estate boom, fueled by tax changes, ensures continued strong lending in the fourth quarter as well,» Diamantopoulos said. Real estate tax changes will go into effect from January next year. The bank said group retail loan balances grew 25.3 percent year on year to 17.5 billion euros at the end of September, with its total loan book hitting 30.4 billion euros, up 12.2 percent. While it expects growth to continue, based on a sustained strong demand for mortgage applications, the bank is shifting its interest beyond the home market to the broader Southeast Europe «where the growth potential is very substantial.» «As part of this strategy we have taken decisions to withdraw from North America while at the same time stepping up investments in Southeast Europe, expanding our branch network and investigating acquisition opportunities,» Arapoglou said. Group retail lending in the area grew 118 percent in the nine-month period. The bank is present in Romania, Bulgaria, Albania and Serbia. (Reuters)

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