Eurobank reports 1Q 2019 Financial Results

Παρασκευή, 31 Μαΐου 2019 17:34

- Net profit1 €27m in 1Q2019
- Core pre-provision income €191m
- Negative NPE formation by €115m q-o-q
- NPE stock down €150m q-o-q
- NPE ratio down to 36.7%
- Provisions over NPEs up to at 53.8%
- Deposits up by €340m q-o-q
- CET1 at 15.7%2 and CAD at 18.2%2
- Timely execution of transformation and NPE reduction acceleration plan: Merger with Grivalia completed and bids received for €9.5bn securitizations

“Full and timely implementation of our accelerated plan for the cleanup of our balance sheet remains our top priority. The merger with Grivalia, the first milestone of our roadmap, has recently been completed, seamlessly and without any delay. The merger brings our total CAD ratio to a best-inclass 18.2%, which will serve as a springboard for the rest of our announced initiatives.

Regarding the next steps, we have received binding offers for a ca. €2bn securitization of residential mortgage NPEs (code name Pillar) and non-binding offers for the first mutli-asset-class NPE securitization of ca €7.5 bn (code name Cairo) and the sale of a majority stake to our market-leading loan servicer FPS. Furthermore, DBRS announced provisional rating for the Pillar senior note, making it the first Greek NPE securitization transaction with a public rating. Having secured keen investor interest, we are moving forward in the next phase to get binding offers for Cairo and FPS within July and to select the preferred bidder for all three transactions.

Our Q1 results are supportive of our efforts. The bank is on a solid profitability course, with preprovision profit of €205m and a net profit of €27m for the quarter, despite persisting challenges. Liquidity continued to improve, as we added a further €340m to our deposit base, mainly driven from the Greek market and our international activities which are a constant contributor to the Bank’s profitability. On NPEs stock, the total portfolio was reduced by €150 m on the back of continuing negative formation, bringing the NPE ratio lower to 36.7%, the lowest among local peers, and the coverage ratio higher to 53.8%.

On the back of continuing solid performance, we are confident that we will be able to deliver on all parts of our plan within the time schedule we have outlined and to restore the Bank’s key metrics to levels fully comparable to our European peers’ at the end of 2021, as per our target. As our accelerated plan for the cleanup of our balance sheet is executed on a timely manner, the focus will gradually shift more and more towards the financing of the economy, the growth of our loan book, business development across all areas which support fee and commission income and further cost containment.”
Fokion Karavias, CEO

1Q2019 Results Analysis

2019 is a landmark year for Eurobank, as the corporate transformation and the acceleration plan for the reduction of NPEs is executed on a timely manner. The first phase of the plan, which is the merger with Grivalia, has already been completed. It enhances substantially the capital position of the Bank, creates value to shareholders and enables the faster clean-up of the balance sheet. The second phase of the plan, the NPE reduction acceleration, is being executed: Binding offers have been received for the €2bn mortgage securitization and non-binding offers for the €7.5bn multi-asset securitization and the sale of the subsidiary company FPS which services NPEs.
In terms of operating performance, Eurobank demonstrated a positive performance in 1Q2019, as net profit3 at a Group level reached €27m.
- Net interest income receded by 3.4% y-o-y to €343m.
- Net fee and commission income were up by 2.7% y-o-y to €66m, driven by higher fees from the Branch Network activities.
- Core income amounted to €409m, against €419m in 1Q2018, whereas total operating income fell to €423m, from €452m the respective quarter last year, mainly due to lower other income.
- Operating expenses decreased by 0.6% y-o-y for the Group and 2.1% y-o-y in Greece.
- Core pre-provision income declined by 4.6% y-o-y to €191m and pre-provision income receded by 12.0% y-o-y to €205m.
- The NPE formation was negative by €115m in 1Q2019. The NPE ratio decreased by 30 basis points q-o-q to 36.7%. The stock of NPEs was down by €150m in 1Q2019 and provisions over NPEs increased by 60 basis points q-o-q to 53.8%.
- Loan loss provisions came down by 1.5% y-o-y to €165m and accounted for 182 basis points of the average net loans.
- International operations remained profitable, as net profit4 rose by 7.6% y-o-y to €36m in 1Q2019.
- CET1 and CAD, pro-forma for the Grivalia merger, reached 15.7% and 18.2% respectively and compare to 2019 CET1 OCR of 10.25% and total CAD OCR of 13.75%.
- Group loans5 and customer deposits increased q-o-q by €54m and €340m respectively, while the loans to deposits ratio improved further to 91.7%, from 92.6% at the end of 2018. 

FULL REPORT

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