Eurobank’s Q3 earnings up 27 percent

EFG Eurobank met market expectations yesterday with a 27 percent rise in nine-month earnings, fed by robust growth in retail credit at home and in Southeast Europe. Greece’s third-largest lender, the first Greek bank to report nine-month results, said its performance rendered its full-year net profit target of at least 615 million euros achievable. Eurobank reported a net profit of 489 million euros ($623 million). Analysts in a recent Reuters poll were expecting a 26 percent rise in earnings to 484.5 million euros on average. «Eurobank operations continued their rapid development, demonstrating strong growth in Greece and Central and Southeastern Europe in the third quarter of 2006,» the group said. The bank will pay an interim dividend of 0.36 euros per share, up 20 percent on last year. The shares will trade without the interim dividend on December 1. «I expect the bank’s full-year profit target of 615 million euros will be exceeded,» said analyst Dimitris Haralambopoulos at Alpha Finance. Eurobank said retail credit – mortgages and consumer loans – grew 27.8 percent year-on-year to 15.6 billion euros as households continued to take advantage of low real interest rates, borrowing money to buy property and consumer goods. The group’s loan book in Southeast Europe expanded 91.4 percent to 2.9 billion euros. Net loan additions in the third quarter came to 558 million. Eurobank is present in Romania, Bulgaria, Serbia, Poland, Turkey and Ukraine. Earlier this year it clinched deals to buy Turkey’s Tekfenbank, Bulgaria’s DZI Bank and Universal Bank in Ukraine, eyeing growth opportunities in these markets. «Full-year earnings growth will top 20 percent as retail loans in Greece continue to expand and operations in Southeast Europe are starting to contribute more to the bottom line,» said analyst Manos Hadjidakis at Pegasos Securities. Loan growth drove net interest income up 19.2 percent in the nine-month period to 1.17 billion euros. The group maintained its net interest margin at 3.3 percent. Trading gains from bonds, equities and foreign exchange activities rose 83 percent year-on-year to 93.3 million euros. Eurobank’s non-performing loan (NPL) ratio was 3.05 percent, 88 percent covered by provisions. Return on average equity (ROE) improved by 50 basis points to 23.5 percent. Eurobank shares trade on 15.8 times estimated 2006 earnings, broadly in line with its European peers (15.5).

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