ATEbank sees profits up 10-15 pct from Balkans

ATEbank, Greece’s sixth-largest lender, expects to be generating about 10 to 15 percent of its earnings from Romania and Serbia by 2010, its deputy chief executive said yesterday. «Our target is earnings from Romania and Serbia to contribute at least 10 to 15 percent to group profit by 2010 from about 6 percent currently,» ATEbank Deputy Governor Panayiotis Varangis told Reuters in an interview. «We will increase our branches in Romania to 30 this year from 18 currently. We are targeting 50-55 branches by 2010.» ATEbank, 77 percent state-owned, bought a majority stake in Romania’s Mindbank in 2006, its first step outside Greece, and later acquired about 20 percent of Serbia’s AIK Banka. Lack of exposure to subprime loans and related securities has spared Greek lenders the large writedowns seen by some of their peers. Still, the market turmoil has put pressure on their shares. ATEbank shares are down 24 percent so far this year versus the broader Greek market’s 27.7 percent fall. They trade at 11 times 2008 estimated earnings compared to a multiple of 10 for European peers. Sniffing out bargains Varangis said ATEbank will look into another acquisition in Romania if the opportunity emerged. «Our goal is to grow organically in Romania but if we come across an opportunity, we will look into it. We are considering buyouts in Southeast Europe and Egypt to expand our presence in the region. So far we have not spotted anything interesting.» He said Romania is a country with strong growth, a large population and low banking penetration. It needs a lot of infrastructure investment and may join the eurozone. Greece has said it aims to reduce its holding in ATEbank by as much as 15 percent as part of its state divestments agenda to pay down public debt. «We would like to see the government reduce its holding in the bank, this will increase the free float and enable new investors to become shareholders,» Varangis said. The bank, with a current market capitalization of 2.58 billion euros, expects to increase return on equity (ROE) to 20 percent by 2010 from a current 17.4 percent. «We are targeting at least a 10 percent annual growth in lending, after writedowns until 2010, with non-performing loans (NPLs) falling below 4 percent of the loan book from 7.1 percent now,» Varangis said. ATEbank grew net profit by 28 percent last year to 241 million euros on strong growth in retail loans and retail credit. «The pace of growth in mortgages and consumer credit we saw last year is continuing in early 2008, we have not seen a slowdown,» Varangis said. «There is, of course, a rise in the cost of funding as deposits have become more costly.»

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