Superb performance by the majority of domestic banks

At an especially tough time for the banking sector at an international level as a result of the credit crisis that broke out last August, domestic banks seem not only to be showing no signs of a negative impact, but are breaking all of their previous records. And they surely have all reasons to party. Profits posted by the country’s four major banks, National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank, in the first nine months of 2007, amounted to -3.1 billion. Total profits by all listed banks rose to -4.5 billion, or an increase of 62 percent year-on-year. The growth surge recorded by domestic banks during the last five years has caused a gap between banking and all other business sectors. Cumulative profits posted between January and September 2007 by some major Greek companies, such as Coca-Cola HBC, the Hellenic Telecommunications Organization (OTE), the Organization of Football Prognostics (OPAP), Mytilineos Group, Intralot, Hellenic Petroleum, and the Public Power Corporation (PPC), are hardly up to 50 percent of the profits posted by the four major domestic banks. For instance, National’s profits of -1.3 billion are over three times higher than those of Coca-Cola HBC, regarded as the country’s strongest industry, and 16 times higher than those of Hellenic Petroleum. The above figures become even more striking when compared with profits posted by medium- and small-cap companies. Profits posted by listed food companies amount to -31 million, a figure which represents just 2.4 percent of National’s profits alone; earnings by retail and wholesale companies, totaling -510 million, represent 11 percent of banks’ profits; and, even worse, profits by the country’s listed construction firms of -31 million are more or less equal to a mere 0.7 percent of bank profits. External contribution In addition to the continuing domestic retail banking growth, the rapid growth of Greek banks’ foreign operations has resulted in an overwhelming mixture of performance. In the nine-month period under review, National’s largest share in profits derived from Finansbank, Turkey, with profits of -349 million contributing almost one-third to the group’s overall gains. National’s takeover of the Turkish bank has finally proven wrong certain parties in Greece who had regarded it as a scandal. Another example of the excellent record of Greek banks in foreign countries is EFG Eurobank, which recorded an overall increase in its loan portfolio of 33.5 percent, but with loans in foreign states skyrocketing by 160 percent. Total loans granted by Eurobank amounted to -43.1 billion. Impressively, new loans in Greece rose to -1.2 billion, accounting for 90 percent of all new loans granted in the country. Eurobank officials told Kathimerini that in 2008 the group expects to place more loans in foreign countries than in the domestic market. However, not all banks have joined the party with equal enthusiasm. Some banks are merely observing the record-breaking stunts of their competitors. French groups operating domestic banks, for instance, look as though they are not operating in the same environment. But they are. Emporiki Bank (Credit Agricole) posted a drop in profits, while Geniki Bank (Societe Generale) continues to record steady losses. The reasons should be sought in the bad shape of the two banks themselves. Both Emporiki and Geniki have been state-run banks and have in the past been used to serve petty political interests. And such deep-rooted mentalities are certainly not easy to eradicate.