Geniki, still in the red, looking forward to a profitable 2007

Geniki Bank, majority-owned by France’s Societe Generale, expects to turn profitable in 2007 but loan-loss provisions will keep it in the red this year, its chief executive said yesterday. «I don’t think with the loss we reported in the beginning of the year we can be profitable in 2006,» Geniki’s Chief Executive Jacques Tournebize told Reuters in an interview. «[The year] 2007 should be the first year of profitability for the bank.» Geniki, which was taken over by SocGen in 2004, is being restructured to compete with Greek heavyweight banks. Loan-loss provisions in the first quarter surprised on the upside, resulting in a 20.2-million-euro ($25.73 million) loss and delaying an expected swing to profit. «We’ll still have to provision for the rest of the year, but the amount will not be of the size we saw in the first quarter,» Tournebize said, with Geniki adopting its parent’s stringent methods to ensure proper coverage of non-performing loans. More competition Tournebize welcomed the prospect of another big French bank entering the Greek market, as Credit Agricole pursues a takeover of Emporiki Bank. «If Credit Agricole succeeds in acquiring Emporiki, it will be good for competition. They can be a tough competitor,» Tournebize said. Agricole, France’s largest retail bank, is competing with the Bank of Cyprus to acquire Emporiki, Greece’s fourth-largest lender by assets. The authorities have set a July 25 deadline for any other counteroffers. Higher rates A widely expected interest rate hike by the European Central Bank (ECB), possibly as early as Aug 3, is not seen slowing Greece’s fast-growing consumer credit business, Tournebize said. «I do not see any immediate impact on credit growth. There may be an impact on delinquencies as rates go up, gradually becoming evident,» Tournebize said. «Overall, the market will keep on growing with mortgages gradually approaching the average indebtedness levels in Western Europe.» Based on the latest data from Greece’s central bank, household credit (mortgages, credit cards and consumer loans) grew at an annual 26 percent in April. Household indebtedness was 70 billion euros or about 38 percent of annual output. Tournebize said Geniki’s branch network will expand to 150 by 2007 from 130 now. The bank is increasing its home loans at a pace «a little above the market’s expansion rate, with consumer loans a bit below.» «What people need to understand is that recovery takes time. It is not possible to turn around a bank in a few months,» Tournebize said. «We are moving in the right direction, building a strong bank.» (Reuters)