National Bank maintains champion Q1 performance with 59 pct rise in earnings

Strong retail borrowing and contained costs boosted National Bank’s first-quarter earnings by a better-than-expected 59 percent, Greece’s largest lender reported yesterday, as it tapped consumer credit growth locally and abroad. National Bank reported yesterday a first-quarter group net profit of 250.2 million euros ($321 million), which compared with an average forecast of 223.4 million stated in a Reuters poll of analysts. Quarter-on-quarter, earnings grew 28 percent. «This performance was achieved in a three-month period that is seasonally low compared to other quarters of the year,» CEO Takis Arapoglou said in a statement. «Our rapid growth in Southeast Europe means that 10 percent of our profits are now derived from this region.» «Net interest income is closely watched and it came in slightly below expectations. In terms of volume growth in consumer credit, National lagged other major peers,» said Alpha Finance analyst Dimitris Haralabopoulos. Strong retail lending The group’s net interest income (NII) grew 13 percent to 427.7 million euros, lifting its net interest margin to 3.33 percent from 3.11 percent in the same period in 2005 and 3.16 percent in the previous year as a whole. Analysts were expecting NII of 442 million euros on average. Total loans grew 17 percent year-on-year, topping 31.5 billion euros, with retail lending expanding 28 percent and making up 62 percent of the group’s loan portfolio, versus 57 percent in the first quarter a year earlier. Mortgages were the fastest-growing part of the loan book, up 31 percent, with consumer loans and credit cards up 21 percent. Group lending in Southeast Europe rose 40 percent. «The general trend in mortgage lending reinforces expectations of yet another successful year ahead in this segment,» the bank said. «Retail banking is the driving force behind growth in Southeast Europe.» National, with operations in Romania, Bulgaria, Serbia and Albania, recently clinched a deal to acquire Finansbank as a foothold in neighboring Turkey. The group, with a current market value of 11.2 billion euros, is planning a 3-billion-euro rights issue to finance the acquisition and will seek shareholder approval tomorrow. Its shares have been trading at around 12.8 times 2006 forecast earnings, at a small premium to other European banks, according to Reuters Estimates data. National Bank improved its cost-to-income ratio by 790 basis points year-on-year to 47.2 percent, with return on equity (ROE) rising by 440 basis point to 30.9 percent. Separately, Arapoglou defended the Finansbank acquisition before Parliament’s Economic Affairs Committee, saying it was a correct business move which gives National a strategic advantage. «It represents the most ideal option for expansion into the neighboring country, as Finansbank has been Turkey’s best-performing bank in recent years and has one of the best management teams in the country,» he said. (Reuters, Kathimerini)