Banks feel the down pull of poor trading activity
Three of the biggest banks in the country yesterday confirmed market suspicions that the first quarter would be a subdued period for the sector, as they reported moderate to sharp falls in earnings on the back of depressed trading activity and the stock market drought. Two of the banks said that net interest revenues continued to grow by double-digit figures, defying forecasts that growth in this sector is set to slow down. However, the overall results painted «a bad picture of the banking sector,» said Manos Giakoumis, banking analyst at P&K Securities. EFG Eurobank Ergasias, which kicked off the earnings season, said that group pretax profits after minorities in the first three months of the year were down by 19 percent to 93 million euros. Consolidated profits after tax and minorities fell by 22 percent to 67 million euros. Excluding a 22-million-euro one-off gain from the rental of the King George Hotel last year, the bank said net profits rose by 5.5 percent. Driven by a 50-percent jump in consumer lending and a 39-percent rise in mortgage lending, loans soared by 27 percent. Deposits showed a 6.5-percent increase. This resulted in a 16-percent rise in net interest revenues, while the net interest margin cleared the 3-percent level. Eurobank’s results were calculated according to International Accounting Standards. Alpha Bank, the largest private sector bank, blamed a 63-percent drop in first-quarter profits on the adverse money market and the unfavorable comparison with last year’s high gains. Its consolidated net profits after tax and minorities plunged to 23.1 million euros from 62.6 million euros. Net interest income dropped by 2.5 percent to 172.2 million euros despite a rise of more than 115 percent in mortgage loans and a 55-percent rise in consumer loans. Alpha Bank said it aims to improve profitability by cutting costs, a strategy which was beginning to show results in the first quarter as personnel costs fell by 10 percent. Piraeus Bank, the smallest of the three banks, reported a 1.7-percent dip in consolidated pretax profits to 30.7 million euros. Pretax profits after minorities were down by 7.1 percent to 27.3 million euros. Net interest revenues increased by 28 percent on the back of a 10-percent rise in deposits and a 20-percent hike in loans. Piraeus did not publish a breakdown of its revenues, noting that figures would be released at the end of May. P&K’s Giakoumis said it was too early to assess the second quarter, but «I don’t expect any dramatic difference, maybe slightly better results.» Analysts said with interest rate convergence already in place, the banking sector will need to cut costs in order to boost revenues. «Cutting costs is the name of the game,» said one.
