Eurobank Ergasias Services And Holdings SA (EGFEF) Q2 2024 Earnings Call Highlights: Strong ...

GuruFocus News
4 min read

In This Article:

  • Earnings Per Share (EPS): EUR0.20 for the first half of 2024.

  • Tangible Book Value Per Share: Increased to EUR2.25.

  • Return on Tangible Book Value: 18.5%.

  • Net Interest Income: Up 9% year on year.

  • Fees: Increased by 5% year on year.

  • Cost to Income Ratio: Reached a new low at 32%.

  • Core Pre-Provision Income: Up by 10% year on year at EUR958 million.

  • NPL Ratio: Stood at 3.1%.

  • Coverage Ratio: 93%.

  • Cost of Risk: Declined to 69 basis points from 81 basis points in the previous year.

  • Core Operating Profit: EUR814 million, up by 16% year on year.

  • Net Profits: EUR732 million for the first half of the year.

  • Fully Loaded CET1 Ratio: 16.2% as of June 2024.

  • Group Loans: Increased by EUR1.2 billion in the first half of 2024.

  • Group Deposits: Increased by EUR1.4 billion in the second quarter.

  • Net Loan to Deposit Ratio: Stable at 72%.

  • Net Interest Margin: 283 basis points for the first half of the year.

  • Commission Income: Reached EUR147 million, a record performance.

  • Operating Costs: Lower year on year in Greece by 1.2%.

  • Core Profit Expectation: Expected to exceed EUR1.6 billion for the full year 2024.

  • Return on Tangible Book Value (Revised): Estimated at circa 16.5% for the full year 2024.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Eurobank Ergasias Services And Holdings SA (EGFEF) achieved investment-grade status by two agencies, Moody's and DBRS, for the first time since 2011.

  • The company reported a strong financial performance with earnings per share of EUR0.20 and a return on tangible book value of 18.5% for the first half of 2024.

  • Net interest income increased by 9% year on year, surpassing projections, while fees grew by 5% year on year.

  • The acquisition of a majority holding in Hellenic Bank in Cyprus is expected to create a regional banking group with a balance sheet size of EUR100 billion, offering significant growth potential.

  • Eurobank exceeded its sustainability targets, with 20% of corporate loan disbursements classified as sustainable, and revised its full-year 2024 goals upwards, expecting a return on tangible book value of around 16.5%.

Negative Points

  • The cost of risk, although declining, remains a concern at 69 basis points compared to 81 basis points in the first half of the previous year.

  • Net interest income slightly decreased quarter-over-quarter by 1.8% due to factors such as lower Euribor and higher deposit costs.

  • The NPL ratio, while stable, remains at 3.1%, indicating ongoing challenges in asset quality.

  • The company faces potential challenges in realizing synergies from the Hellenic Bank acquisition, with full business plan details expected only in early 2025.

  • The effective tax rate for the full year 2024 is expected to be close to 32%, which could impact net profitability.

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