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Country: Greece
NATIONAL SECURITIES
Sector: Banks
AN AFFILIATE OF THE NATIONAL BANK OF GREECE GROUP
Recommendation: Market Perform
Q1 02 Financial Results
APRIL 26, 2002
Group EAT down 35% to €60.6mn from €93.4mn for the same period last
year...
Although consolidated Q1 02 EAT were much pressurized, the results were more or
less in line with market expectations. Adjusting for the extraordinary outcome from
the sale of King George Hotel during Q1 01, bottom line performance looks better.
Thus, excluding XO events the group reported Q1 02 EAT of EUR 61.28mn vs.
72.39mn, down by 15.35% on a y-o-y basis.
Reuters:
EFGr.AT
Bloomberg:
EUROB GA
Market Cap:
€3950.5mn
Current price:
€12.64
Shares outstanding:
312,538,426
Free float:
45.87%
Gross Core operating revenues (exclud. financial operations) posted an
increase of EUR 5.84mn (+2.6%)...
Exploiting its relatively strong position in consumer and SME’s lending, which are the
highest spread generators for the Greek banks, the Group managed to increase first
quarter Net interest income by 6.9% to EUR 168.3mn. Total loans posted an increase
of ca. 25%, with most notable rises in Consumer (+50%) and Mortgage lending
(+39%). It is worth noting that the contribution of NII to GCOI has reached 71.8%
vs. 68.9% a year earlier, which is indicative of the group’s switch to traditional way of
operations, as other sources of income have declined severely.
Q1 01
Loan Mix (% of Total Portfolio)
Q1 02
Q1 02 Commission and Securities income were down 23.86% and 8.7% respectively,
as a result of ongoing adverse capital market conditions that hit equity and bond
related gains. Incorporating income generated by financial transactions, which was
67% down on a yearly basis, in the Gross Operating result operating profit for the
Group is lessened by 2.9%, since the contribution of that source of income in Q1 01
was not negligible (7.9% of GOI).
70%
60%
50%
40%
Pressure on efficiency, due to the 7.8% increase of Total Costs...
30%
Efforts to restrict costs were not particularly successful, given that personnel and
administrative expenses increased by 5.8%, while provision and depreciation charges
went up by 9.9% and 19.6% respectively. These expenses vindicate management
efforts to restructure and improve both IT and human resources. The increase of
provisions on a yearly basis can be explained by the fact that EFG holds a very
aggressive policy on retail lending. It is worth noting that Q1 02 coverage ratio has
fallen to 3% from prior 3.3% due to the fact than NPL’s were standing below 3% in
the first quarter of the current year, thus the Group fully provides for any possible
future liability. Although the Group managed to keep personnel expenses in check
(Personnel Expenses/Total Costs in 2002 at 46.2% vs. 47.5% in 2001), we sense that
further focus should be placed on that factor as it remains of critical importance to
bottom line performance.
20%
10%
0%
SBL's
Mortgages
EFG vs. Banking Index
Consumer Corporate
Banking Index
EFG Eurobank
20
7500
16
5000
12
8
2500
4
0
02/01/2002
06/02/2002
13/03/2002
0
23/04/2002
Banking Analyst:
Ioannis Markakis
E-mail:[email protected]
Tel: +30 10 33 28 425
Fax: +30 10 33 28 614
BS items were further improved…
BS outlook under Greek GAAP improved due to the apparent convergence to higher
yielding assets. Securities over Net Loans stood at 41.2% vs. 59.5% a year earlier,
indicating that expansion of the loan portfolio was mainly supported by securities
reduction and partly through deposits. Q1 02 Total Assets were standing at EUR
19.82bn vs. 19.66bn a year earlier mainly due to increase of the loan portfolio by
25% and the slightly increase of Deposits by 1.99%. Annualized ROAE was standing
at 12.6%, while annualized ROAA was standing at a satisfactory 1.23%.
Investment Summary
We reiterate our Market Perform recommendation as the stock currently trades 16.7x
its estimated 2002 earnings, slightly above the Weighted Average for the Greek
Banking Sector (16.3x), having already discounted bottom line growth projected for
the year end (tax benefit 10% due to the recent acquisition of Telesis Investment
Bank). Our Market Perform rating is fair given that the stock has outperformed the
Banking Sector YTD by ca. 14.7%.
NATIONAL SECURITIES S.A.
EQUITY RESEARCH DEPARTMENT
COUNTRY: GREECE
APRIL 26, 2002
SECTOR: BANKS
Q1 02 Financial Statements
EFG EUROBANK ERGASIAS CONSOLIDATED BS ACCOUNT
2001
2002
1.444
1.164
Assets
Cash and Balances to Central Bank
Treasury Bills and other securities
Assets Under Management
Q1 01
Interbank deposits and loans
Q1 02
0
0
2.268
1.044
Loans and advances to customers
9.124
11.410
14000
Securities
5.425
4.701
12000
Investments
213
142
Intangible Assets
32
68
Tangible Assets
334
369
8000
Other assets
417
572
6000
Prepayed and accrues income
401
353
19.659
19.824
10000
4000
Total Assets
2000
Liabilities
Due to credit institutions
0
L-Term Inv.
Repos
Other Funds
Breakdown of Commissions & Fees
Q1 01
Q1 02
30
616
429
15.777
16.090
Other liabilities
720
1.183
Accruals and differed income
243
131
Customer amounts
Provisions for Liabilities and charges
Capital and Reserves
Minority interests
Total Liabilities
25
28
42
2.001
1.841
274
108
19.659
19.824
All amounts in EUR million
20
EFG EUROBANK ERGASIAS CONSOLIDATED P&L ACCOUNT
15
10
5
0
Lending
MF & AUM
Capital
Mark.
Other
2001
2002
Interest income and similar income
399
345
Less : interest expense and similar charges
242
177
Net interest income
157
168
Dividend income
5
3
Net commissions
66
60
Net profit on financial operations
20
6
0
2
Other operating income
Surplus value from participatng companies
Breakdownof OperatingIncome
Q1 01
Gross operating results
Q1 02
Less : Staff costs
0
0
248
241
69
72
180
General expenses
44
47
160
Non-income taxes
0
0
140
Depreciation and amortization expenses
15
18
120
General provision for credit risk
17
19
100
80
Provision for staff retirement indemnities
0
0
Other provisions
0
0
104
85
Total operating results
60
Extraordinary profit or loss
40
Net profit for the period (before tax)
20
Less : Income tax
0
NII
Fees & Commis.
Other
1
125
85
30
22
Less: Income tax differences from prior years
0
0
Less : Minority shareholders' share
2
2
93
61
Net profit
PAGE: 2
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