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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 21